Bengaluru, May 4: There has been speculation going on for quite some time that Flipkart and Walmart are in the final stages of their deal. In fact, Walmart has been in talks to buy 55 percent of Flipkart through a mix of primary and secondary share purchase for quite some time, valuing Flipkart around $20 billion.
According to reports that came a few days back, Amazon.com Inc made a formal offer to buy 60 percent of Flipkart, thus complicating Walmart Inc’s bid for majority ownership of the Indian online retailer. It is expected that the offer is a ploy to block Walmart from bringing its expertise in logistics and supply chain management to Flipkart.
Recent reports say that a chance of a deal materializing between Amazon and Flipkart looks less likely because any such deal could spark monopoly concerns as Flipkart and Amazon dominate India's e-commerce market Reportedly, the Walmart-Flipkart deal will see Flipkart's valuation rise as much as 70 percent within a year. This deal will also give the world's largest brick-and-mortar retailer, access to an e-commerce market that Morgan Stanley estimated to be worth $200 billion in a decade's time. It is quite a smart strategy by Walmart to take on Amazon.
Flipkart has been on a consolidation mode ever since Amazon's India entry, in 2014, Flipkart acquired Myntra, for an estimated Rs 2,000 crore deal. Then in 2016, Flipkart owned Myntra went on to acquire Jabong for an estimated $70 million.
SoftBank is the most significant shareholder in Flipkart with a stake of 23.62 percent. Tiger Global is the second largest with 22.44 percent of preference share capital. Naspers (MIH B2C Holdings BV) is the third largest with 14.57 percent of preference share capital. According to a recent Economic Times report, Flipkart’s Executive Chairman Sachin Bansal may exit Flipkart, once Walmart enters.
With so many twists and new angles coming in, it will be interesting to see, how things materialise in the e-comm space in the coming days, as the top players jostle with each other.