Tencent has first right to buy in future Flipkart share sale
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.
US-based retail giant Walmart Inc has said that Flipkart's minority share holder Tencent would have the first "right to purchase" if any shareholder of 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, hold around five per cent share of the company.
Walmart had said Friday that it has complied with the tax obligations of its USD 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 to complete its deal with Flipkart and now holds 77 per cent stake in the Indian e-commerce major.
Besides, the Bentonville giant's investment includes USD 2 billion of new equity funding to help accelerate the growth of the Flipkart business.
Last month, on August 8 to the Walmart-Flipkart deal was approved by the Comeptition Commission of India, although has been now challenged by trader body CAIT (Confederation of All India Traders) before the National Company Law Appellate Tribunal (NCLAT).
NCLAT, which is also an appellate authority over CCI, has asked US retail major WalMart and e-commerce major Flipkart to explain their way of doing business in India.
It has asked Wal-Mart International Holdings Inc to file its reply before it by September 20, 2018.