SoftBank undecided on exiting Flipkart

SoftBank undecided on exiting Flipkart
Highlights

SoftBank’s Masayoshi Son will take a call in the next 7-10 days on whether to exit India’s biggest online retailer or stay invested.Japan’s SoftBank Group Corp has not yet decided to sell its 20-22 % stake in Flipkart to US retailer Walmart Inc, sources said.

SoftBank’s Masayoshi Son will take a call in the next 7-10 days on whether to exit India’s biggest online retailer or stay invested.Japan’s SoftBank Group Corp has not yet decided to sell its 20-22 % stake in Flipkart to US retailer Walmart Inc, sources said.

SoftBank’s Masayoshi Son will take a call in the next 7-10 days on whether to exit India’s biggest online retailer or stay invested.

Walmart had on Wednesday announced that it will pay about $ 16 billion to buy 77 % stake in Flipkart.

A statement issued by Walmart that day identified Flipkart co-founder Binny Bansal, Tencent Holdings Ltd, Tiger Global Management LLC and Microsoft Corp as the investors who would hold the remaining 23 %, implying SoftBank had agreed to sell its 20-22 % stake.

The factors that hold key to the decision include the tax SoftBank has to pay on profits it would earn from such share sale.

SoftBank had invested $ 2.5 billion in Flipkart and exiting the company would fetch it up to $ 4.5 billion. The $ 2 billion profit would be taxed as per Indian law.

On May 9, hours before Walmart was scheduled to announce the Flipkart acquisition, SoftBank chief executive Masayoshi Son told an investor call on his company’s earnings that Walmart had agreed to buy a controlling stake in the Indian e-commerce company.

“Last night, (they) reached a final agreement and it was decided that Flipkart will be sold to America’s Walmart,” Son had stated in Tokyo, according to an AFP report.

He had gone on to state that the $ 2.5 billion that the Japanese company through its Vision Fund had invested in Flipkart was worth about $ 4 billion in the deal.

He had not clearly stated if SoftBank had agreed to sell the stake at such valuations.

In case SoftBank decides not to sell, Walmart would be left with about 55 % of Flipkart.

On Wednesday, all significant shareholders in Flipkart like Naspers, venture fund Accel Partners and eBay had confirmed they were selling their shares to Walmart.

South African internet and entertainment firm Naspers, which had invested $ 616 million in Flipkart in August 2012, sold its entire 11.18 % stake in the company to Walmart for $ 2.2 billion. eBay said it is selling its stake in Flipkart for about $ 1.1 billion.

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