A new report has emerged suggesting that Amazon on Monday made a formal offer to acquire 60 percent stake in India’s largest online retailer Flipkart. Walmart was reportedly said to be in talks with Flipkart to acquire a majority stake in its business expanding across diverse verticals. Amazon’s offer for the buyout will be close to what Walmart offered, the report states. The TV channel’s sources add that the American e-commerce giant has offered a breakup fee of $2 billion as part of its bid, to counter Walmart’s proposal of acquiring 80 percent of Flipkart’s business. With that, Amazon will reportedly merge the two e-commerce companies going forward if this deal is secured while getting Flipkart’s founders to sign a non-compete agreement barring them to start a new e-commerce company until a predefined term.
Walmart, on the other hand, has already confirmed in its proposal to let Flipkart continue its business with its current corporate structure while also retaining the company’s management team and its CEO Kalyan Krishnamurthy. With this proposal, Flipkart’s founders and investors are inclining more towards the Walmart deal than considering Amazon. Citing its sources, the TV channel reported to have information about Sachin Bansal, co-founder of Flipkart, visiting the U.S. to negotiate final terms with Walmart. The global team of the latter will also be visiting India soon to finalize the deal by next month. If the deal goes through, it will further intensify the rivalry between two of the world’s largest retailers to reign over India’s e-commerce market that is estimated to touch $200 billion in the next decade, according to Morgan Stanley.
Both Flipkart and Amazon are in head-to-head competition in the Indian e-commerce space with the former trying to maintain its polar position while the latter aiming for it. Amazon India’s parent company has fueled in billions of dollars to its Indian operations over the past few years to expand its reach. Despite being the largest brick and mortar retailer on the planet, Walmart hasn’t been able to make a dent in the e-commerce space, which it plans to reverse by investing in the Indian market that is predicted to show immense growth in the coming years.