Amazon Offers to Buy Stake in Flipkart

05 May, 2018, 01:29 | Author: Pamela Mathis
  • Walmart will buy at least 55% of Flipkart in a deal that will value the company at $20-21 billion

CNBC TV-18 reported that Amazon's bid is likely to be on par with Walmart's. For this, it is also willing to pump in an additional $3-4 billion, if Flipkart opts to pursue Amazon's offer instead of Walmart.

Chennai: Walmart is only a few days away from finalising a deal to acquire majority stake in Flipkart despite SoftBanks dissenting voice in the Flipkart boardroom, people directly aware of the matter have said. The final negotiations on the stake and the valuation are on and the deal is expected to be closed by June.

SoftBank was reportedly more keen on Flipkart considering Amazon, which meant a share swap between its Indian unit and Flipkart, while other investors like Tiger Global Management, Accel, Naspers and Tencent are in favor of Walmart. There are investors who would question Amazon about its investments. Both Walmart and India's homegrown e-commerce leader stand to gain much if this long-speculated deal goes through.

The sources added that Sachin Bansal, founder of Flipkart, was in the United States last week to oversee final lap negotiations with Walmart. The company led by Doug McMillon has spent months negotiating with the online marketplace and its large backers, including SoftBank's Vision Fund, which invested past year. Amazon has already vowed to pour $5 billion into India and the efforts are already paying off.

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Amazon made a bid to acquire a 51 to 55 percent stake in Flipkart a couple of years ago, but the offer was deemed to be too low at the time, a source told Reuters.

Even for Flipkart, merging itself with Amazon at this stage will be like leaving a lot at the table, finds Ujjawal Chaudhry, engagement manager, e-tailing, RedSeer. The stake could reach as high as 80%, reported Bloomberg. It might not want to leave the game this early. Take Amazon Prime: It offers Indian customers two-day delivery, the ability to stream video and music and other perks for $15.

SoftBank stands to make a tidy profit on a deal it cut a year ago. The company has been pouring billions of dollars in the country to ship goods to shoppers faster. Tiger Global and SoftBank are largest shareholders in Flipkart, holding 20% each in the company.

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