Walmart has completed a thorough due diligence process on Indian eCommerce firm Flipkart as it prepares to take a controlling stake in the company.
Sources revealed that Walmart has already presented a shareholder agreement and is looking to offer about $10 billion to $12 billion for the stake, which would value Flipkart at around $20 billion.
Talks between the two companies are ongoing. Both declined to comment.
In February, it was reported that Walmart was looking to acquire a 40 percent stake in Flipkart. But now, it seems the company is looking for a bigger piece, most likely so it can take on Amazon in India.
“As large as they [Walmart] are, Amazon has eaten away at a significant chunk of their revenues and I think … they view India as the largest market possibly for this [taking on Amazon],” a source said back then.
If the deal is completed, it would represent one of the largest overseas deals Walmart has ever contemplated.
Flipkart, which is backed by companies such as SoftBank, Tiger Global, eBay, Accel Partners, Naspers, Tencent Holdings and Microsoft, has been competing with Amazon for a bigger piece of India's online retail market, which could be worth $200 billion in a decade.
The deal with Walmart would give Flipkart additional funds, as well as the benefit of the retailer's extensive experience in retailing, logistics and supply chain management.
Sources also said the acquisition could assist Flipkart in developing its private label collection. That news comes as Amazon has also been looking to expand its own private label offerings in India.
Amazon India VP Manish Tiwary said in February that the company is hoping to launch new product categories, but he would not name specific items. “We have selection gaps in every category … our large vendors on the private labels side, we’ll keep on filling the gaps using them,” he said.