Have Walmart, Flipkart Tied the Knot?

Walmart may end up spending anywhere between $8 billion and $12 billion to buy a majority stake in Flipkart

Amazon, the number two e-tailer in India after Flipkart, will be observing the development closely.

Meanwhile, Flipkart has concluded another buyback of shares from its investors in what appears to be a procedure aimed at converting it into a private company under Singapore law, which will allow Walmart to complete the acquisition of an over 55 per cent stake more easily than if it were a public company. Accordingly, Walmart gets to pay between $14-16 billion for its stake in Flipkart. Amazon is out of the running unless Walmart hits unforeseen trouble.

Earlier this week, TV channel CNBC-TV18 reported Amazon had made a formal offer to buy 60 per cent of Flipkart and that it had also proposed Dollars 2 billion breakup fee to convince Flipkart to discuss its offer.

Another surprise element in this speculative news that has gripped the industry, is that of participation from Google's parent company Alphabet Inc.

"The deal between Flipkart and Walmart is a done thing, as evident from the exit of majority of its investors".

A final close to the deal is expected within 10 days, the report said, but the terms could still change and a deal is not certain.

Moving closer to its deal with Walmart, e-commerce major Flipkart has bought back over 1.8 million shares worth more than United States dollars 350 million from minority investors, as per information filed by Flipkart with Singapore's Accounting and Corporate Regulatory Authority.

Flipkart, together with its fashion units Myntra and Jabong, controls almost 40 per cent of India's online retail market, while Amazon is a close second with a 31 per cent share, according to data from research firm Forrester. Walmart declined to comment to Retail Dive Friday and Flipkart didn't immediately return Retail Dive's request.

SoftBank is the most significant shareholder in Flipkart with a stake of 23.62 percent.

Last year, Flipkart had won a backing from big companies like Microsoft and Tencent. After China, where sadly for both the companies, Alibaba has irreversibly established its strong-hold, India is the biggest market in Asia which might become a launch-pad for either of the e-commerce giants. It is already the most valuable startup in India.

According to reports, the tech giant is likely to invest $1-2 billion.

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