Walmart and Flipkart Close in on a $15 Billion Deal

Citing unidentified sources, Bloomberg reported on Friday that a deal to sell a 75 percent stake in Flipkart to Walmart had been approved by Flipkart’s board. The sale to the US retail giant is expected to cost approximately US$15 billion, but won’t be finalised until taxation-related concerns and a handful of other issues are resolved.

Sources have also reported that Alphabet Inc. is looking at investing in Flipkart as well, however, details of this are yet to be confirmed. This is on top of speculation that SoftBank Group, one of Flipkart’s biggest investors, are looking at selling its 20 percent share in the business as part of the deal if the price is right.

“SoftBank does not like to be a passive investor,” one of the sources told Bloomberg.

CNBC-TV18, an Indian TV channel, reported last week that Amazon had made an offer to buy a 60 percent share in Flipkart. As part of its offer, Amazon reportedly proposed a $2 billion breakup fee to show Flipkart it was serious about the offer.

While Amazon has shown interest in making a deal with Flipkart for some time now, insiders believe Walmart is the safer, more likely option as Amazon is a direct competitor for the Indian e-commerce giant.

A deal with Amazon would mean Flipkart would have to open its books for due diligence to its biggest competitor, exposing sensitive commercial information.

Flipkart currently controls roughly 40 percent of India’s online retail market, while Amazon controls roughly 31 percent, according to data from Forrester. The Indian market is believed to be highly lucrative, with an expected value of as much as $200 billion within the next 10 years.

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