Amazon may make rival bid to buy Flipkart: report
04 April 2018
Online retail giant Amazon is likely to make a rival bid for Flipkart, which is currently in talks with US retail giant Walmart to sell stake of over 40 per cent, as Walmart’s entry could pose a direct challenge to Amazon in Asia's third-largest economy, say reports.
A Mint newspaper report citing sources said Amazon.com Inc may submit an offer to buy Indian e-commerce firm Flipkart, which is currently in talks with Walmart Inc for a stake sale.
The US retailer plans to buy a majority stake through a mix of primary and secondary share purchases in a deal that could value Flipkart at $21 billion, the report said.
Walmart, the world’s largest retailer, is in talks to buy 55 per cent of Flipkart through a mix of primary and secondary share purchases in a deal that could value Flipkart at $21 billion, the report said.
Tiger Global Management, Accel Partners, Naspers, IDG Ventures and others are expected to sell much or all of their shares Flipkart if the Flipkart-Walmart deal goes through.
A deal with Walmart will aid Flipkart in its fight against Amazon, which is planning an aggressive expansion in India, with investments of up to $5 billion, including into online grocery deliveries.
Analysts expect Flipkart to push through the deal with Walmart rather than accept a possible Amazon offer, which could only help to create an online monopoly in India.
Flipkart, founded by former Amazon employees Sachin Bansal and Binny Bansal in 2007, controls nearly 40 per cent of India`s online retail and is ahead of Amazon, according to estimates by research firm Forrester.
In August 2017, Flipkart received a commitment of $1.4 billion in fresh capital from Japan’s SoftBank Group, valuing the online retailer at about $14 billion.
Flipkart, which is seen as one of the most attractive assets in the global internet economy, has, so far, raised more than $6 billion.
Flipkart also owns fashion businesses Myntra and Jabong, eBay India and mobile payments firm PhonePe.
Besides Amazon and Walmart, Flipkart has also attracted other investors like Google, say reports.
A valuation of over $20 billion is a big turnaround for a company that was fighting a losing battle with Amazon’s Indian arm less than 18 months ago. But the return Kalyan Krishnamurthy changes its fortunes. Starting with the flagship Big Billion Day sale in October 2016, Krishnamurthy has managed to set Flipkart on a recovery path.
Since it launched here in June 2013, Amazon has invested more than $2 billion in India and is planning to invest $3 billion more. However, Flipkart continues to lead the $18-billion online retail market in India by a slender margin.