Walmart to shell out $12b to buy Flipkart

US retail major completes due diligence, Amazon likely to counter bid..

New Delhi : The battle for acquiring a majority stake in e-commerce firm Flipkart is heating up with US retail major Walmart looking to shell out about $10 billion to $12 billion for purchasing a 51 per cent stake in the Indian firm.

A stake in Flipkart would pit Walmart against in India and it was reported that the US e-commerce major is exploring a rival offer for Bengaluru-based e-commerce player.

Walmart completed a thorough due diligence process on the Indian e-commerce firm this week, according to a Reuters report, citing sources, as the US retail giant looks to take a controlling stake of 51 per cent or more in the Indian company.

Walmart has already floated a shareholder agreement, or offer proposal.

The US retail major’s offer would value Flipkart at roughly $20 billion, the report added.

However, Amazon, which operates its own online marketplace in India, has also initiated talks to buy a majority stake in its Indian rival. Amazon may soon submit a bid for Flipkart.

Flipkart, which is backed by the likes of SoftBank Group, Tiger Global, eBay, Accel Partners, Naspers, Tencent Holdings and Microsoft Corp, was founded by Sachin Bansal and Binny Bansal (not related) in 2007 as an online seller of books.

Walmart, which was in talks to purchase a stake of over 40 per cent in Flipkart, is now seeking a bigger stake. A deal is far from finalised, however, and talks between the two parties and investors in Flipkart are ongoing.

Flipkart and Amazon are fighting to grab a bigger piece of India’s online retail market which is worth around $200 billion in a decade.

Walmart’s investment would give Flipkart not just additional funds to fight Amazon, but also arm it with a formidable ally with extensive experience in retailing, logistics and supply chain management.

Walmart will also aid Flipkart in developing its private label business, according to the Reuters report. For Walmart a deal would open up a vast market and another front to take on its biggest rival.

Walmart is initially not expected to rock the boat and is likely to retain top management. It may, however, look to bring in some of its own people on the legal and finance teams at Flipkart.

Walmart would also likely have a say in the appointment of a chief financial officer at Flipkart, if the deal is concluded, said another of the three sources.

Tiger Global Management, Accel Partners and Naspers would likely sell their entire stakes in Flipkart to Walmart if a deal is reached, the report added quoting sources. Japan’s SoftBank, which has invested in Flipkart through its Vision Fund, may also consider selling a part of its roughly 20 percent stake if Walmart offers a good price. SoftBank last year invested $2.5 billion in Flipkart through prime and secondary share purchases.

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