US e-tailer Amazon to thwart competition with its rival Walmart in India may offer a deal to buy out homegrown e-commerce major Flipkart.
Amazon has held early exploratory talks to buy Flipkart, said a Mint report quoting anonymous sources.
Walmart, which is planning to repeat the US-success formula in India, is in talks to buy 55% of Flipkart in a deal that pegs the e-commerce firm’s valuation at $21 billion.
The US retailer plans to buy a majority stake through a mix of primary and secondary share purchases. The deal is said to be sealed soon. Flipkart’s early backers Tiger Global and Naspers will cash out if the deal gets through.
Through the investment in Flipkart, Walmart will take on its arch rival Amazon in India. In last ten years, Amazon has consolidated retail major’s market share on home turf- the US.
Over the past few years, Walmart has made significant strategic investments and acquisitions to have upper hand in the competition. In 2016, it acquired US-based online retailer Jet.com for $3.3 billion.
In the same year, Walmart acquired a 5% stake in China’s second-largest e-commerce firm JD.com. Amazon currently holds a 43% share of the US e-commerce business, while Walmart has less than a 4% share.
Meanwhile, both Flipkart and Amazon have not confirmed the report.
This is not the first time such a report has appeared. Earlier in 2015 Amazon’s reportedly offered $8 billion to Flipkart, $5 billion for e-tailer’s e-commerce business and $3 billion for the logistics business. But the deal broke down on the matter of valuation. However, Flipkart had termed the report as pure fiction and said that there have been no talks or discussions for a potential sale.
India e-commerce market is slated to cross $50 billion in 2018. Both Flipkart and Amazon have been in fierce battle against each other to grab the larger pie of it.To prove their leadership, both e-tailers have infused a huge sum of capital in recent times. Both players every now and then make claims supremacy over each other.
Since its entry in 2013 in the country, Amazon has invested more than $2 billion in India and has said it will invest $3 billion more. Still, the e-tailer lags behind Flipkart by a slender margin in overall market share.
Whereas the Bengaluru-based e-tailer has been focusing on boosting market share rather than narrowing its losses. Till date, Flipkart has secured more than $6 billion. In August 2017, Flipkart got $1.4 billion in fresh capital from Japan’s SoftBank Group, on $14 billion valuations.