Amazon offers to buy 60% stake in Flipkart, but Walmart still ahead

American e-commerce major Amazon has formally entered the battle for Flipkart, a move that may slow down rival Walmart’s effort to buy a controlling stake in the Bengaluru-headquartered firm. Sources indicated that Amazon, which aggressively competes with Flipkart in the India market, has put in a matching bid along with a $2-billion breakaway fee. While a competing bid could possibly raise Flipkart’s valuation, thereby helping investors, Walmart is learnt to be determined to strike a deal with India’s e-commerce poster boy.

Amazon has offered to buy a 60 per cent stake in Flipkart. If the bid is accepted, the combined entity would more than dominate the country’s online retail market, a reason for the Competition Commission of India (CCI) to step in.

An Amazon India spokesperson said the company doesn’t comment on rumours.

Talks of Amazon making a counter bid to upset Walmart’s online play have been doing the rounds for a while. Insiders had till recently maintained that Amazon had not come to the deal table yet and that talks between Walmart and Flipkart were progressing positively. Softbank, a top investor in Flipkart, is believed to have been apprehensive about a deal with Walmart. In fact, SoftBank is pushing for a Flipkart-Amazon deal, sources said.

Walmart has agreed to invest around $12 billion to pick up about 60 per cent in Flipkart, in a mix of primary and secondary sale. While the valuation of the primary component can be as high as $20 billion, the secondary component is understood to be at a lower valuation.

Amazon India