United States online retail major Amazon.com Inc is reported to have made a formal offer to buy a 60 per cent stake in Indian online retailer Flipkart.
The booming India e-commerce market is estimated to have touched $33 billion in 2017-18. Sources indicated that Amazon, which aggressively competes with Flipkart in the India market, has put in a matching bid along with a $2-billion breakaway fee. Chasing a business started by two former employees suggests the $760 billion e-commerce giant is anxious by the idea of its main local rival joining forces with Walmart.
- In April, Reuters reported that Walmart was close to buying a majority stake in Flipkart for up to $12 billion.
Indeed, the report added that Flipkart's co-founders as well as its investors, including Tiger Global, are in favour of the deal with Walmart. Notably, SoftBank which holds about 21 per cent stake in the Flipkart has given a green signal to it and slated to bag $4 billion exit. Apart from possible scrutiny from the Competition Commission of India (CCI), a bid from Amazon also comes with the risk of having to share highly competitive data during due diligence, the people cited above told ET.
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The financial daily reported that India's largest online retail giant has approximately 145 stakeholders quoting the company's filing with Singapore's Accounting and Corporate Regulatory Authority. Another person who has knowledge of the deal talks said, "The shareholding agreement with Walmart is still to be signed". The buzz around this deal only got louder recently, with SoftBank's CEO, Masayoshi Son, reportedly meeting Walmart's CEO Doug McMillon to discuss the deal late last month. The stake could reach as high as 80%, reported Bloomberg.
Representatives at Amazon, Flipkart and Walmart were not immediately available for comment. "It will be very hard for them to win India back if they miss this opportunity".
Flipkart's board had appeared to be leaning toward Walmart over Amazon because it thinks the deal will have fewer hurdles.
Overall, sales from Walmart International, which runs about 6,300 stores globally, stood at $118 billion in the fiscal year ended 2018, down almost 14 percent from 2014.
In an interview with Reuters on Tuesday, McKenna downplayed analyst criticism that the company has been slow to move in India.