US-based retail giant Walmart Inc has said that Flipkart’s minority shareholder Tencent would have the first “right to purchase” if any shareholder of the Indian e-commerce firm sells “any shares or other equity securities to Alibaba”.
Flipkart’s investor would have to give “written notice of at least five business days prior” to Tencent for such transfer or sale of share, according to the share issuance and acquisition agreement filed by Walmart with the US Security and Exchange Commission.
“No change of control sale or drag-along sale to Alibaba shall be effected (each an Alibaba Transfer), unless Tencent shall have been given written notice of at least five business days prior to the consumption of such transaction…,” said the agreement between Wal-Mart International Holding Inc and Flipkart.
It further added, “Tencent shall have the right to purchase all (but not less than all) of the shares or equity securities to be issued by the company or transferred by any shareholder in connection with such Alibaba Transfer…”
Tencent a minority shareholder in Flipkart, holds around 5% shares of the company. Walmart had said Friday that it had complied with the tax obligations of its $16 billion acquisition of Flipkart but did not say the quantum of taxes it paid. The tax authorities had set September 7 as the due date for depositing a withholding tax on the deal amount it paid to shareholders of Flipkart.
On August 18, Walmart Inc had announced the completion of its deal with Flipkart and that it now held 77% stake in the Indian e-commerce major.
Besides, Walmart’s investment includes $2 billion of new equity funding to help accelerate the growth of the Flipkart business.
Source: Mint