According to reports, Walmart looks like it may be ahead of Amazon in the Flipkart buyout. India’s largest online e commerce platform, Flipkart, is looking at selling a controlling stake to the Bentonville, Arkansas-based company, rather than Amazon, because of the greater certainty in such a deal, according to people familiar with the matter.
Both the United States headquartered companies are bidding for a large stake in Flipkart. The shares are reportedly valued at $ 20 billion. Sources close to the Flipkart development said the Flipkart board recently met to discuss the competing proposals and thinks Walmart could close a deal more quickly and smoothly.
The Walmart and Flipkart deal has been doing the rounds for almost a year now. While Flipkart is extremely interested in the deal with Walmart, the deal seems to be having more problems than solutions. Flipkart founders, Sachin and Binny Bansal, also favour Walmart because they would continue to help lead the business and the US company’s executives have emphasised their commitment to the market.
Walmart is in talks to acquire minority stakes in Flipkart, to the tune of 50 to 60%. The final amount will depend on how Flipkart’s existing shareholders are willing to sell, including Japan based investing firm, SoftBank and Tiger Global Management. If the deal goes through, the Walmart a major stake in an emerging market of 1.3 billion people. The US company is the world’s largest retailer, but it has struggled against Amazon as consumers increasingly migrate to online commerce. India is the next big potential prize after the US and China, where foreign retailers have made little progress against Alibaba Group.
To make matters exciting, Amazon and Jeff Bezos are pushing really hard for the Flipkart deal to go through. Once finalised, Walmart’s money will fortify its rival and make the competition all the more fierce. By contrast, an Amazon deal for Flipkart would consolidate the market and allow Bezos to step up investments in India.
