SoftBank decides to sell entire stake in Flipkart to Walmart; exit could help investors attract Google parent Alphabet
With SoftBank deciding to exit Flipkart, Walmart and Tiger could get Google parent Alphabet to buy into the Indian e-commerce story.
After weeks of uncertainty, Japan's SoftBank Group Corp has finally decided to sell its 21 percent stake in Flipkart to US retail behemoth Walmart, according to a media report.
“SoftBank has decided that it will sell its stake in Flipkart as it has come to an agreement with Walmart on the same,” a person familiar with the development was quoted as saying by The Times of India.
SoftBank's Masayoshi Son was uncertain on whether to exit India's largest e-commerce player, or stay invested. One of the factors behind the dilemma was the tax SoftBank has to cough up on profits earned from the Flipkart stake sale.
SoftBank's $2.5 billion investment in Flipkart will now fetch up to $4.5 billion. A $2 billion profit will be taxed as per Indian law -- as the profit accrued is from shares that were held for over two years, it will attract a long-term capital gains tax of 20 percent plus surcharge and education cess, effectively wiping away a fourth of the profit.
Another factor was Son's relationship with Walmart and SoftBank's strategy to be a long-term investor.
Meanwhile, a report in the Business Standard, on 21 May, said that Google parent Alphabet Inc. is still undecided over buying a minority stake in Flipkart. Walmart and American hedge fund Tiger Global have reportedly held multiple rounds of discussions with Google to convince the internet giant to invest in the Indian firm.
Alphabet's hesitancy, according to the Business Standard, followed SoftBank's uncertainty.
Now, with SoftBank's decision regarding its exit from Flipkart, Walmart and Tiger could get Alphabet to buy into the Indian e-commerce story.
With inputs from PTI
The tech giants requested that they were not an adjudicating body and would be prompt in removing objectionable content if the URL links were made available to them
The work dynamics are constantly changing and technology is at the centre of the evolution process
The observations by Justice VG Arun came during the hearing of Isaac's plea seeking quashing of the two summons issued to him by the ED in connection with the KIIFB probe.