Amazon jumps into race for Flipkart; makes formal offer, while Walmart yet to close $12 billion buyout

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Updated: May 2, 2018 1:46:06 PM

Flipkart battle: Even as world’s largest retailer Walmart Inc looks to buyout India’s Flipkart in a $12 billion deal, rival Amazon has made a formal offer to pick up a 60% stake.

The development of a potential Flipkart-Amazon deal comes at a time when Amazon’s top boss Jeff Bezos has planned to pump in .5 billion in the year.

Flipkart battle: Even as world’s largest retailer Walmart Inc looks to buyout India’s Flipkart in a $12 billion deal, rival Amazon has made a formal offer to pick up a 60% stake, CNBC TV18 reported quoting sources. Amazon’s offer is likely to be on par with Walmart’s bid for the Indian e-commerce major. Further, Jeff Bezos-run Amazon is also seeking a non-compete agreement with Flipkart’s founders, sources told the channel. Amazon is also offering a breakup fee of up to $2 billion.

Earlier, a Bloomberg report said that all the major investors in Flipkart have agreed to the deal by Walmart, after a debate over a potential acquisition by Amazon.com. According to the report, Flipkart’s board had seriously considered Walmart and Amazon as potential partners, but ultimately decided Walmart, as a deal with Walmart would mean lesser regulatory hurdles due to its lack of India presence in India as compared to Amazon. The report adds that Flipkart founders Sachin and Binny Bansal are in favour of a Walmart acquisition.

Also read: Walmart to hit buy on $12 billion Flipkart deal?: Key things to know

CNBC TV18 report added that while Flipkart has received a formal offer, Walmart continues to remain the clear frontrunner in the deal, as Tiger Global, South Africa’s Naspers as well as founders Sachin and Binny Bansal prefer Walmart over Amazon.

In Walmart’s proposed deal, Tiger Global Management will sell nearly all its 20 percent stake in Flipkart, while SoftBank Group will reportedly offload a substantial part of its 20 percent-plus holding, said the Bloomberg report quoting sources. Further, Walmart was looking to pick up 60-80% of valuing Flipkart at $20 billion.

Also read: Jeff Bezos world’s first centibillionaire: Amazon boss’ journey to beat Bill Gates to the top of Forbes list

The development of a potential Flipkart-Amazon deal comes at a time when Amazon’s top boss Jeff Bezos has planned to pump in $5.5 billion in the year. Taking note of his India business, Jeff Bezos noted recently that Amazon.in is the fastest growing marketplace in India, and the most visited site on both desktop and mobile, according to comScore and SimilarWeb. Currently, Amazon.com holds 27 percent of India’s $30 billion e-commerce market.

The potential Flipkart-Amazon deal will also bode well for Softbank, after it put in $2.5 billion last year for a 24-percent stake in Flipkart, in a bid to get a bigger chunk of India’s e-commerce market, as it already a major investor in Paytm.

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