Amazon offers to acquire 60% stake in Flipkart

SoftBank, Flipkart's largest shareholder, has reportedly been pushing other investors to wait for a rival offer for Flipkart from Amazon.

Indian e-commerce giant Flipkart, partly owned by technology investments firm, SoftBank, may be in the race to be acquired not just by Walmart, but also by Amazon if a report from CNBC TV-18 is to be believed. It is believed that this offer is equal to Walmart's however, Amazon has proposed a $2bn breakup fee and Walmart's offer would mean the USA retail chain picking up an 80 per cent stake.

Led by Marc Lore, Jet's former CEO who now heads Walmart's e-commerce division, the retail giant bought e-commerce platform Shoebuy in January 2017, followed by outdoor apparel retailer Moosejaw in February, women's wear site Modcloth in March, direct-to-consumer premium menswear brand Bonobos in June, and last-mile delivery startup Parcel in September. In 2017-18, Amazon Seller Services - the India unit - received over Rs 8,000 crore from its U.S. parent. Adeal with Flipkart would step up the Walmart-Amazon battle for a bigger share of India's fledgling e-commerce market, which Morgan Stanley estimates will be worth $200 billion in a decade.

"The Flipkart board is considering Amazon bid but it does not cover the operating risk involved in pursuing such a transaction", said this source. Walmart is only few days away from striking the largest cross-border M&A deal involving an Indian business despite SoftBank's dissenting voice in the Flipkart boardroom, people directly aware of the matter said.

Flipkart didn't respond to an email seeking comment.

"Now with Walmart in the mix things are different", the source said. Jeff Bezos refused to comment on the report.

Amazon, which is said to be making an offer that is on par with Walmart's bid is also reportedly looking to sign a non-compete agreement with Flipkart's founders.

Sales from Walmart International, which runs about 6,300 stores globally, stood at $118 billion in the fiscal year ended 2018, down almost 14 percent from 2014.

This was in large part due to adverse currency movements, which hurt the money repatriated from its foreign arms, but also because of a series of missteps in major markets.

In an effort to fix its worldwide performance, Walmart in January appointed Chief Operating Officer Judith McKenna to run its global unit and has indicated it will focus on its core North American markets and growth markets like China and India. Public and private initiatives to increase broadband internet access in India, as well as 7.2% GDP growth, have made the market even more desirable.

  • Eleanor Harrison