The Flipkart takeover saga took a new dimension when The Mint reported that Amazon may submit a rival bid to buy the company. Flipkart, however, is leaning toward selling to Walmart, as a deal with the retailer has greater certainty, Bloomberg reported. The deal may become the USA retail giant's biggest ever online business acquisition. And the price for existing shares would have a value of at about USD12 billion, the source said.
The US retail giant will buy both existing as well as new Flipkart shares with numerous early investors in the company such as Tiger Global, Accel and Naspers likely selling their entire stakes.
A deal is not yet finalized, and talks between Walmart, Flipkart and its investors are ongoing, one of the people said. Apart from the names above, Flipkart's investor roll-call includes eBay, Tencent Holdings and Microsoft Corp.
However, the possibility of such a deal is very unlikely due to the Indian regulatory norms.
The deal, if it goes through, would unlock the booming Indian e-commerce market for the world's largest offline retailer.
For years, Walmart tried to enter India but was confined to wholesale business due to the restrictions on foreign investment.
Meanwhile, Flipkart stands to not only add financial muscle but also strengthen its supply chain and enhance efficiency in procurement, product assortment and retailing.
India e-commerce market is slated to cross $50 billion in 2018. India's leading etailer, besides, has been looking to open retail stores in India for a long time now but has been waiting for the right investment partner. Such a deal would heat up competition between Walmart and Amazon overseas as they fight over India's still-young ecommerce market, which could be worth $200 billion in 10 years, Morgan Stanley estimates.
By comparison, Amazon closely trails Flipkart, which along with its fashion units controls almost 40 percent of India's online retail market, according to estimates by researcher Forrester. Any deals among entities boasting turnovers of over Rs 6,000 crore or assets of Rs 2,000 crore need approval from the Competition Commission of India (CCI).