By Prarthana Mitra
US-based online retail giant Amazon may soon make a rival offer to outbid Walmart to acquire Indian e-commerce player Flipkart, as per media reports. Earlier last month, anonymous associates said that Flipkart has plans to collaborate with Walmart, to make a splash in the Indian food sector and make up for ground lost to Amazon in both offline and online retail markets. The race for the Indian e-commerce market, which is expected to cross over $50 billion in 2018, seems to be intensifying as speculation about offers from both companies continues to pour in.
Anonymous sources with knowledge about the matter told media outlets that Walmart has been in talks with Flipkart to buy about 55% of the company, which could push up the valuation of Flipkart to up to $21 billion. Speculations about Amazons offer may unsettle all the progress and discussions that have led up to expected Flipkart-Walmart merger. However, according to other sources, Amazon has only expressed a cursory interest and conducted exploratory talks so far, and final offers have not been made yet.
Vested interests in SoftBank-backed Flipkart: Whats in it for Amazon?
Bengaluru-based Flipkart, founded by former Amazon employees Sachin Bansal and Binny Bansal in 2007, controls nearly 40% of Indias online retail market, ahead of Amazon. Last year, Japans SoftBank bought roughly a fifth of the firm for $2.5 billion. Currently, SoftBank is the largest shareholder in Flipkart with a 23.6% stake followed by Tiger Global with 20.5%. Founders Binny and Sachin Bansal hold around 10%.
Jeremy King-led multinational retail corporation Walmart continues to eye their prospective partnership with homegrown Flipkart. If the deal goes through, it would be one of the biggest overseas deals for Walmart, giving it access to an e-commerce market which is estimated to be worth $200 billion by 2028, according to Morgan Stanley.
With sources close to the matter confirming that the probability of a deal with Amazon is low, it could be likely that the rumours surrounding Amazon’s offer are a tactic to increase the valuation of Flipkart, a common move in merger negotiation.
Amazon declined to comment when contacted by Reuters. Flipkart and Walmart also did not respond to requests for comment. As neither company has confirmed any details, it seems like it is too early to tell whose court (read: cart) will be greener by the end of this trade-off.