Walmart offers to buy back part of Flipkart ESOPs for $800 million
21 Sep 2018
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Walmart, which has bought out online marketplace Flipkart, also plans to buy back shares from Flipkart’s employees at $126-128 per share, allowing them to cash in on part of their stockholding in, according to an e-mail to staff.
The e-mail, which follows the $16-billion buy-out by Walmart of a majority stake in Flipkart, said eligible staff members will be allowed to liquidate part of their employee stock ownership plans (ESOPs) at $126-128 per unit.
Walmart would shell out $800 million (around Rs5,755 crore) for the share buy-back.
In a recent filings with the US Securities and Exchange Commission, Walmart said it intended to buy 62,42,271 shares from Flipkart’s ESOP pool of 11,947,026 shares.
Walmart had said it has “reserved 11,947,026 company ordinary shares for issuance under the company option plans, of which options to purchase 6,242,271 company ordinary shares are outstanding as of the agreement date”.
A Flipkart spokesperson said the ESOP repurchase programme is part of its “continuing efforts to thank and reward our employees for their service”.
“Flipkart has a strong culture of fairness and does acknowledge that employees are an invaluable asset. We take immense pride in being the employer of choice and believe in rewarding employees by making them partners in the organisation’s success,” the spokesperson said.
Flipkart had, earlier in December, ahead of the Walmart deal, bought back ESOPs worth over $100 million from over 3,000 current and former employees as well as its other units, such as Myntra, Jabong and PhonePe.
The development comes close on the heels of, Flipkart Marketplace Private Limited, another Singapore based Flipkart group entity, infused Rs3,460 crore (around $487 million) into its Indian subsidiary, Flipkart Internet.
Walmart had said earlier that if it closed the Flipkart acquisition by the end of July, the deal will impact its earnings for the year ending January 2019 by $0.25-0.30 per share and by $0.60 per share for its FY20 earnings.
As per Walmart’s estimates, the Flipkart deal will have a $2 billion impact on Walmart by the completion of FY20 ($0.75 billion in FY19 and $1.35 billion in FY20).
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