Flipkart’s fate is up in the air.
CNBC reports the e-commerce juggernaut has made an offer for a 60 percent stake in the company. The agreement stipulates that Flipkart’s founders, who were Amazon employees at one time, sign non-competes.
Walmart is reportedly on the cusp of an offer for 51 percent of the company that values Flipkart at $20 billion. Unnamed sources said a bid from Amazon would be in the same ballpark, which it will sweeten with a $2 billion “break-up fee” to convince Flipkart to discontinue talks with Walmart. If Amazon is successful, it anticipates the deal would close by the end of June.
The fight for Flipkart is just the latest in a long tit for tat battle between the two retail organizations. Just as Amazon put down roots via its $13.7 billion Whole Foods deal, Walmart announced it’s shoring up its online sales potential via a virtual mall anchored by Lord & Taylor. Amazon’s making a push into private label while Walmart swallows up a slate of direct-to-consumer clothing brands. And the list goes on and on from last mile fulfillment options to IoT launches.
According to the industry insiders who spoke to Reuters, this latest development could be more about Amazon trying to box Walmart out of the Indian market than anything else. The publication notes Amazon currently dominates a 27 percent share.
The fact that Amazon is so entrenched in the market is one reason why some are saying the deal could evaporate on monopoly concerns since Flipkart commands 40 percent of the market.
The recent bid is reportedly Amazon’s second attempt to take over Flipkart. The company tried to secure a controlling share two years ago, but was rebuffed, according to a source.
The stakes are high for all involved given that the Indian market is estimated to be worth $200 billion a year within the next 10 years.
Both suitors have been mum on the deal thus far.