Amazon is reportedly planning to acquire Flipkart
Walmart has already been talks to acquire majority of stakes in India’s e-comemrce giant Flipkart. Now the latest report claims that Amazon has also shown its interest in acquiring Flipkart at the time when Flipkart is already in talks with Amazon’s rival Walmart.
Walmart is preparing to buy 55% of Flipkart’s stakes through mix of primary and secondary share purchases. It was reported that existing investors of Flipkart including Tiger Global Management, Accel Partners, Naspers, IDG Ventures and others are expected to sell their stakes in the Flipkart-Walmart deal. This purchase will put Flipkart at $21 billion valuation.
Not just Walmart, few rumours claimed that Google is also planing to invest in Flipkart at a valuation of $15-16 billion.
This can be the primary reason why Amazon has shown its interest in Flipkart. After getting fresh funds from Walmart, it could be a pain for Amazon that has already invested a lot in Indian market. But Amazon is still lagging behind the Flipkart.
Walmart has already trying its best to get considerable marketshare in online shopping segment. It has already bought Jet.com for $3 billion in 2016 to increasing its online retail market presence.
Flipkart has so far raised $6 billion and owns Myntra, Jabong, eBay India and mobile payments firm PhonePe. Even if Flipkart couldn’t manage to become profitable, its fashion arm Myntra is doing really well. Flipkart itself gave tough competition to Amazon and beat it in several occasions.
Walmart has been trying to enter in Indian market for long. It was trying to influence previous Indian government for approving FDI in single retail, but couldn’t get it. Now Walmart is trying to enter in India with investment in Flipkart.
After Amazon’s bid, it will be interesting to see what Flipkart’s board approves. It is worth to note that ET also reported a similar kind of discussions between Amazon and Flipkart in March 2016. But that discussion couldn’t become successful.
Even if Amazon-Flipkart becomes a reality, the merger will not be easy. It will surely raise objections from the industry and could lead to a close scrutiny by the Competition Commission of India (CCI). Many experts confirm the same.
Neither Flipkart nor Amazon has commented on this rumoured buyout.