Amazon just offered to buy a 60% stake in India's Flipkart

Jeannie Matthews
May 3, 2018

Thomson Reuters Amazon.com Inc has made a formal offer to buy a 60 percent stake in Indian online retailer Flipkart, CNBC-TV18 reported on Wednesday, citing sources.

Ecommerce major Amazon has offered to buy 60% stake in Flipkart.

Most Flipkart shareholders also preferred a cashout deal as against a shareswap with Amazon.

Representatives at Amazon, Flipkart and Walmart were not immediately available for comment. Walmart is said to have had the backing of Flipkart's majority shareholders who believe a merger with Amazon would not go past the Competition Commission of India, besides facing a backlash from different sections of the trading community.

Amazon's offer is likely to be on par with Walmart's bid for the Indian company.

Sources said while Walmart is still in talks to buy shares from Flipkart and its investors, the deal will include the purchase of primary and secondary shares.

Reuters reported last month that Walmart was close to buying a majority stake in Flipkart, Amazon's biggest rival in India, for $10 billion to $12 billion. In addition, Walmart would also reportedly retain Flipkart's structure and management, including CEO Kalyan Krishnamurthy.

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A spokesman for Walmart declined to comment, while Amazon said it does not offer comments on rumors and speculation. Softbank, Flipkart's main stakeholder, however, had some apprehensions over a deal with Amazon.

The transaction could be structured in such a way that Walmart increases its ownership in Flipkart over time, they said.

Discussions between India's largest e-commerce firm and Walmart have entered the final stage.

The deal would be the US retail giant's biggest acquisition of an online business and would kick off a battle with Amazon in an Indian e-commerce market that analysts forecast will be worth $200 billion a year within a decade.

Investors expect faster returns from Walmart's investments compared to Amazon, said Yarbrough, a move that limits the brick-and-mortar retailer's ability to spend big on acquisitions in growth markets.

People in the know said that Flipkart has that kept its options open for the initial public offer (IPO) in the future.

US-based fund house Valic, which holds around 4,502 shares in Flipkart, and Vanguard World Fund, which has four lakh shares, have pegged the valuation of the e-commerce company between $15 billion and $19 billion.

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