The Indian e-commerce sector seems to have turned into a battleground for two American giants.
Over the recent weeks, several news reports have suggested that retail major Walmart and e-commerce behemoth Amazon are in the fray to acquire a majority stake in Bengaluru-based Flipkart. Currently, Japan’s Softbank is the largest investor in the company.
Last week, Reuters reported that Arkansas-based retail giant Walmart has completed its due diligence on Flipkart and has made a proposal to buy a 51% stake in it for between $10 billion (Rs66,527.5 crore) and $12 billion (Rs79,833 crore). The deal could close by the end of June, the news agency said.
At the same time, Seattle-based e-commerce major Amazon, too, is trying to acquire a significant stake in the Indian e-retail major, FactorDaily has reported. The US firm has even offered a “breakup fee” of up to $2 billion. A breakup fee is a penalty set during the process of takeover agreements, to be paid if the target backs out of the deal. The fee underscores the seriousness of the negotiations.
Meanwhile, none of the three companies has so far commented on the reported talks. Walmart and Flipkart did not respond to emails from Quartz. “We do not comment on rumours and speculation,” an Amazon India spokesperson said.
But whichever way the deal goes, it will mark a significant milestone for the Indian e-commerce sector.
Why Flipkart matters?
Despite its mounting losses, Flipkart is widely considered one of the most successful Indian startups. Holding a controlling stake in the company can go a long way in ensuring a win in the Indian retail space.
For one, Flipkart is the world’s third-most funded private company, having raised over $7 billion from some of the best-known global investors such as Softbank, Tiger Global, DST Global, Morgan Stanley, and Accel Partners, among others.
Founded in 2008 by IIT-Delhi alumni Sachin Basal and Binny Bansal (not related), Flipkart is the most valued Indian internet business, commanding a peak valuation of over $15 billion.
The post Why are Walmart and Amazon desperate to buy Flipkart? appeared first on Statii News.
source http://news.statii.co.uk/why-are-walmart-and-amazon-desperate-to-buy-flipkart/
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