Who earned how much from Walmart-Flipkart deal

Who earned how much from Walmart-Flipkart deal

As per the definitive agreement between the companies last week, Walmart will acquire about 77 per cent stake in the Singapore entity for $16 billion.

It had bought 23.6% stake in $2.5 billion past year. To remind you, SoftBank had invested over $600 million in Snapdeal in October 2014 to emerge as its biggest stakeholder. This investment, according to an ET report is subject to Softbank being freed from a restrictive clause that does not allow it to invest over $500 million in Paytm Mall, until 2020. In May 2017, SoftBank pumped in $1.4 billion (over Rs 9,079 crore) in Paytm.

At the time, Son suggested that SoftBank, which invested through its Vision Fund, would see a sizable return on its initial investment of $2.5 billion. Furthermore, Chinese e-commerce giant Alibaba's entry through Paytm, Paytm Mall and others will also be a force to reckon with as well.

The I-T department now is going through the Section 9 (1) of the Income-Tax law, which deals with indirect transfer provisions, to see if the benefits under the bilateral tax treaties with countries like Singapore and Mauritius, could be available for foreign investors selling stakes to Walmart. Walmart founder Sam Walton's grandson, Steuart Walton, is reportedly likely to join Flipkart's board of directors.

Since the profit is made from shares that were held for more than two years, it would attract a long-term capital gains tax of 20 percent plus surcharge and education cess, effectively wiping away a fourth of the profit. In some ways however, it's even more of a pain for Flipkart as with eBay pulling the plug on the exclusive agreement they'll have to wait for Walmart to ramp up and Walmart don't have anywhere near the global presence of eBay.

Other deciding factors would be Son's relationship with Walmart and that SoftBank likes to be a long-term investor, sources said, adding the Japanese conglomerate is very bullish on India and sees huge opportunities for growth of investment.

More news: Apple hit with lawsuit over Macbook's "defective" butterfly keyboard

A Walmart spokesperson declined to comment on SoftBank's plans.

Sources said Walmart had indeed courted SoftBank for buying its shares but the Japanese group has not yet taken a final call on the issue. To ascertain the exact tax liability, the revenue department will write to Flipkart seeking the share purchase agreement that the company had entered into with Walmart.

Walmart has already indicated that it may end up investing an additional $3 billion in the Indian e-commerce company within the first year of the deal closing.

"Although we expect that Flipkart will continue to generate losses for the next few years, our credit-positive view is based on India's compelling features, including its 1.2 billion residents and an economy that generates more than 7 per cent annual GDP growth", Moody's added.

Walmart's Flipkart acquisition, the world's largest e-commerce deal, is an all-cash transaction, according to the SEC filing.

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