US: Amazon offers to buy majority stake in Flipkart

As a counter to Walmart’s interest in Indian e-commerce giant, Flipkart, Amazon has reportedly made a formal offer to acquire a majority stake in the Indian eCommerce retailer. According to sources, Amazon wants to buy 60% of Flipkart, CNBC reported.

While Walmart is reportedly far along in talks with Flipkart, Amazon’s offer will likely match Walmart’s. According to reports earlier in 2018, Walmart was considering investing US$10 billion to US$12 billion for the entire deal. But the company’s planned primary investment might be in the neighborhood of US$1 billion to US$2 billion. Even so, Amazon is reportedly offering Flipkart a break-up fee of US$2 billion. The company is also reportedly seeking a non-compete agreement from Flipkart’s founders.

The news comes as Walmart was getting extremely close to securing a deal that would give it a majority stake in Flipkart. That deal was reportedly for US$12 billion at the low end, Bloomberg reported in late April. At the time, experts forecasted that the two sides were two weeks away from reaching a final agreement.

Reports indicated that all major investors in the firm were on board with the big Walmart buy. Tiger Global Management planned to sell nearly all of its 20% stake, while SoftBank Group planned to sell off the bulk of its 20%-plus holding.

If the deal does go through as planned, however, Walmart will be able to access to an emerging market of 1.3 billion possible customers. India is considered global commerce’s next big venue, since China has turned out to be largely uncrackable for outsiders, given the dominance in the nation of Alibaba.

“There isn’t another country with this kind of an opportunity,” Satish Meena, a New Delhi-based senior forecast analyst at Forrester Research Inc., said. “India may not be a big deal now, but it’s the future opportunity that Walmart and Amazon are eyeing.”

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