Amazon Enters Fight For Flipkart With Bid For 60% Stake

The acquisition of Flipkart by Walmart will be an extension of its domestic battle with arch rival Amazon whose expansion is the biggest threat to the retail icon

Ahead of Walmart deal, Flipkart keeps $400 million aside to cut number of shareholders in Singapore: Report

Amazon has reportedly made a formal offer to to buy a 60% stake in Indian e-commerce firm Flipkart.

A report by business TV channel CNBC TV18 said Amazon has offered to merge Flipkart with its India arm and had also offered to pay a break-up fee of $2 billion to affirm the seriousness of its gambit.

Amazon's offer is likely to be on par with Walmart's bid for the Indian company. The buzz around this deal only got louder recently, with SoftBank's CEO, Masayoshi Son, reportedly meeting Walmart's CEO Doug McMillon to discuss the deal late last month. Flipkart had then announced that it had cash in excess of $4 billion on its balance sheet. Flipkart is registered as a public company in Singapore, and needs to reduce the number of its shareholders to below 50 to be recognised as a private limited company in the Southeast Asian country, said the report.

Last month Bloomberg reported the Bentonville, Arkansas-based retailer was likely to emerge as the victor of the bidding war with it offering around $20 billion.

FILE PHOTO: A Common myna sits next to the logo of India's e-commerce firm Flipkart installed on the company's office in Bengaluru, India April 12, 2018.

It also appears that Amazon is seeking a non-compete clause with Flipkart's founders through the deal. However, Amazon was indeed interested in buying Flipkart, said two sources, asking not to be named. The Walmart-Flipkart deal would be Form 1 and an Amazon-Flipkart deal Form 2, said legal experts.

The news underscores how Amazon is focused on winning India's fledgling e-commerce market, and the offer could be a ploy to block Walmart from bringing its expertise in logistics and supply chain management to Flipkart, people familiar with the matter said. After Son's bet on Snapdeal not turning out as planned, Soft-Bank ploughed $2.5 billion into India's largest e-tailer Flipkart just past year.

Indeed, the report added that Flipkart's co-founders as well as its investors, including Tiger Global, are in favour of the deal with Walmart.

Amazon has been gaining ground quickly on Flipkart and it tried to derail the Walmart transaction at least in part because it will fortify the Indian rival. What the shareholding pattern is or what the structure of the deal is not known as yet.

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

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