Amazon Makes Bid To Spoil Walmart-Flipkart Deal
It was reported last month that Walmart was close to buying a majority stake in Flipkart, Amazon's biggest rival in India, for $10 billion to $12 billion
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Amazon.com Inc has made a formal offer to buy 60 percent of Flipkart, CNBC-TV18 reported on Wednesday, potentially complicating Walmart Inc's bid for majority ownership of the Indian online retailer.
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.
Reuters reported last month that Walmart was close to buying a majority stake in Flipkart, Amazon's biggest rival in India, for $10 billion to $12 billion.
The talks with Walmart for what could be its largest acquisition to date are still ongoing, and a deal is expected to be clinched soon, two people told Reuters on Wednesday. However, Amazon was indeed interested in buying Flipkart, said two sources, asking not to be named. They declined to give further details.
A spokesman for Walmart declined to comment. Amazon said it does not offer comments on rumours and speculation, and Flipkart did not immediately respond to a request for comment.
Amazon's offer could kickstart a new battle between it and Walmart, already fierce retail rivals in the United States. The bid emphasizes the importance of gaining a greater foothold in online sales in India, a market expected to be worth $200 billion a year within a decade.
Jeff Bezos, Amazon's chief executive, touted in a letter to shareholders last month that Amazon was India's fastest growing online marketplace.
The world's largest online retailer has been pouring billions of dollars into India to ship goods to shoppers faster, contributing to growing losses internationally. A Walmart-Flipkart deal could lead to more intense price competition, retail consultants said.
On Wednesday, Indian broadcaster CNBC-TV18 reported that Amazon had offered Flipkart a breakup fee of $2 billion to convince it to discuss an offer, which analysts say would bring with it substantial antitrust challenges. Flipkart and Amazon dominate the online shopping space in Asia's third-largest economy.
Flipkart had vetoed an approach from Amazon for a 51 to 55 percent stake in the company two years ago, a source told Reuters, judging its offered price as far too low at the time.
"Now with Walmart in the mix things are different," the source said. "To the best of my knowledge no decision has been made yet. There is no deadline per se."
CNBC-TV18, citing unnamed sources, said Amazon's new bid was likely to be on a par with Walmart's, but that Flipkart's investors and founders continue to favour the deal with Walmart, with founder Sachin Bansal overseeing final negotiations.