Markets

Amazon Makes Formal Bid for Flipkart

Amazon Makes Formal Bid for Flipkart

USA online retail giant Amazon has made a formal offer to buy a 60 per cent stake in India's leading e-commerce marketplace Flipkart, according to a report by a tv channel which cited sources. Amazon also offered Flipkart a breakup fee of $2 billion, the TV channel reported.

A source close to the developments, said that the Flipkart board has given a nod to Walmart's offer a few days ago, reducing any chances of Amazon's entry into the deal.

Earlier, sources told Reuters that Walmart may be able to strike the deal soon and was en route to spending $10-12 billion by the end of June for that.

The $255 billion US retailer was close to wrapping up a deal with Flipkart, valuing it at up to $19 billion, Reuters reported on April 12. Flipkart had then announced that it had cash in excess of $4 billion on its balance sheet.

The Flipkart Group, which includes Myntra and Jabong, has a combined market share of over 39.1% as compared to Amazon's 31.1% in the Indian online retail market, says a recent Forrester Research report.

Most Flipkart shareholders also preferred a cashout deal as against a shareswap with Amazon. Apart from possible scrutiny from the Competition Commission of India (CCI), a bid from Amazon also comes with the risk of having to share highly competitive data during due diligence, the people cited above told ET.

ECB's Draghi says growth has moderated, outlook solid
This, in turn, could have ramifications for the ECB's sole policy objective of ensuring price growth returns to its near 2 percent target.


The Flipkart deal would also propel the Bentonville, Arkansas-based retail behemoth to hasten its online expansion into remaining Asian markets, the sources added.

Amazon's offer came at a time when talks about Walmart-Flipkart deal are still intact.

The deal would be the USA retail giant's biggest acquisition of an online business and would kick off a battle with Amazon in an Indian e-commerce market that analysts forecast will be worth $200 billion a year within a decade. Another person who has knowledge of the deal talks said, "The shareholding agreement with Walmart is still to be signed".

Anyway, Flipkart's investors and founders are leaning towards Walmart's bid and the Sachin Bansal (Flipkart's founder) has already been in the United States to negotiate with Walmart's execs.

Winning the India market has become pivotal for both Amazon and Walmart, the two have not been able to make significant headway in China.

"We have been deliberate and thoughtful, we were not slow to respond", she said.


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