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Amazon may offer to buy Flipkart to rival Walmart bid

Amazon has held early exploratory talks to buy Flipkart even as the latter closes in on a sale to Walmart.

business Updated: Apr 04, 2018 11:21 IST
Shrutika Verma and Mihir Dalal
Shrutika Verma and Mihir Dalal
Livemint, Bengaluru/New Delhi
Walmart is in talks to buy 55% of Flipkart in a deal that pegs the e-commerce firm’s valuation at $21 billion.
Walmart is in talks to buy 55% of Flipkart in a deal that pegs the e-commerce firm’s valuation at $21 billion. (REUTERS File photo)

Amazon may submit a rival offer to buy India’s largest e-commerce firm Flipkart, which is in advanced talks with Walmart Inc. for selling a majority stake, said two people with direct knowledge of the matter.

Amazon has held early exploratory talks to buy Flipkart even as the latter closes in on a sale to Walmart, the people cited above said, requesting anonymity.

Walmart, the world’s largest retailer, is in talks to buy 55% of Flipkart through a mix of primary and secondary share purchases in a deal that could value Flipkart at $21 billion, the people said.

Flipkart investors Tiger Global Management, Accel Partners, Naspers, IDG Ventures and others are expected to sell much or all of their shares in the Flipkart-Walmart deal

Flipkart investors Tiger Global Management, Accel Partners, Naspers, IDG Ventures and others are expected to sell much or all of their shares in the Flipkart-Walmart deal, they said. The secondary share purchases will happen at a lower valuation.

A deal with Walmart is more likely to go through, the people said.

Flipkart and Amazon did not respond to emails seeking comment.

| Read: Walmart in talks to invest about $7 billion in Flipkart in India push

Flipkart investors Tiger Global Management, Accel Partners, Naspers, IDG Ventures and others are expected to sell much or all of their shares in the Flipkart-Walmart deal

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.

Launched in 2007, Flipkart has, so far, raised more than $6 billion. Apart from its eponymous platform, Flipkart owns fashion businesses Myntra and Jabong, eBay India and mobile payments firm PhonePe.

Flipkart is seen as one of the most attractive assets in the global internet economy, benefiting from the long-term potential ascribed to India’s market by investors.

Flipkart’s sale at a valuation of more than $20 billion will be a stunning turnaround for a company that was written off less than 18 months ago in its fight with Amazon’s India arm.

Still, a sale at a valuation of more than $20 billion will be a stunning turnaround for a company that was written off less than 18 months ago in its fight with Amazon’s India arm. Through 2016, Flipkart’s own investors had marked down its valuation as losses at the company soared and it lost market share to Amazon. But after Flipkart brought back Kalyan Krishnamurthy, the company turned around its business, starting with the flagship Big Billion Day sale in October 2016. Krishnamurthy was installed at Flipkart by Tiger Global Management, Flipkart’s most influential investor, in June 2016 and later made CEO in January 2017.

A Flipkart sale at a valuation of more than $20 billion will be a stunning turnaround for a company that was written off less than 18 months ago in its fight with Amazon India

Amazon and Walmart are not the only suitors who have pursued Flipkart. Google also offered to invest in the e-commerce firm at a valuation of $15-16 billion, Mint reported in February.

From Flipkart’s side, negotiations are being spearheaded by Tiger Global’s Lee Fixel.

Since it launched here in June 2013, Amazon has invested more than $2 billion in India and has said it will invest $3 billion more. Still, the company lags behind Flipkart by a slender margin at the top of India’s $18 billion e-commerce market.

An earlier column in Mint has pointed out that a Flipkart-Amazon merger could be a potential end-game. “At some point, if Amazon believes that the price of a scorched earth battle is too high, it might sue for peace and move to merge with Flipkart. If that happens, both parties will win,” the column said.