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Amazon bids for 60% stake in India's Flipkart

04 May, 2018, 14:17 | Author: Kristi Dunn
  • Amazon looking to outbid Walmart in Flipkart deal

In a huge merger on Thursday, reports suggest that U.S. retail giant Walmart Inc has signed a deal to acquire 73% of controlling stakes of Indian e-retail company Flipkart - a deal that will likely prompt the exit of Flipkart's co-founder Sachin Bansal. The deal with Walmart is expected to value Flipkart at about United States dollars 20 billion The deal will involve purchase of primary and secondary shares. These investors, are reportedly expected to fully or partially sell their shares in Flipkart as Walmart makes its acquisition bid for the company. The Walmart-Flipkart deal will potentially help both the companies.

"Binny and Krishnamurthy (Flipkart's web retailer's CEO) have backed the deal with Walmart and the two are seen leading the final negotiations, which will likely result in a share purchase agreement by Walmart by early next week, ' another person close to the deal told TOI".

World's largest retailer Walmart has finally chose to acquire Flipkart.

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. The company did not immediately respond to AFP's request for comment.

The newspaper report that Walmart wants Group CEO Binny Bansal and Krishnamurthy to have more crucial rules in the company. Walmart has been trying to pick up its e-commerce sales, which has been on a decline and a threat for the company that is trying to rival online giant Amazon.

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Some of Flipkart's main investors - USA hedge fund Tiger Global Management, South African tech investor Naspers and venture capital firm Accel - are likely to retain small stakes, the report said.

These sellers are demanding clarity on the way forward on the grounds that they too need to prepare their business plans accordingly, in light of the deal that is likely to value Flipkart at about $20 billion.

In a resolution Flipkart filed with the Singapore authorities, the company said it would look to acquire its own shares from investors at $131.4 per share.

If the deal with Walmart goes through, it would provide Flipkart with more arsenal to go up against Amazon in the Indian market.

Walmart is now seeking a bigger stake than previously expected.

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