Amazon's Flipkart bid just not high enough

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But this week, according to a report by CNBC affiliate CNBC-TV18, Amazon has tendered a competing offer-complete with a $2 billion "breakup fee" to cover the cost of a potentially scuttled deal.

Flipkart is in the final stage of negotiations with Walmart, which is looking to buy a significant holding in the company. Amazon is also seeking a noncompete agreement with Flipkart's founders, the report said, adding that Walmart has added no such stipulation in its offer to acquire an 80 per cent stake in the company. Furthermore, Flipkart founder Sachin Bansal recently visited the U.S. to negotiate with Walmart, and the retail giant may return the favour by visiting India soon to close the deal.

Though Amazon's interest in Flipkart is unconfirmed and could just be sly negotiating tactics by either side, any show of insecurity would be surprising. Amazon has also offered a break-up fee of $2 billion in order to compensate for negative consequences for severing the Walmart deal.

A successful move by Amazon to grab Flipkart would likely send Walmart back to the drawing board when it comes to India, retail consultants and analysts said.


Sources told Reuters earlier this month that Walmart was likely to reach a deal to buy a majority stake in Flipkart, Amazon's biggest competitor in India, by the end of June for $10 billion to $12 billion. The report noted the offer for the majority of Flipkart should be similar to what Walmart is offering to get a crack at the more than 1 billion consumers in the country.

Amazon's offer could kickstart a new battle between it and Walmart, already fierce retail rivals in the United States that have reportedly dueled over at least one acquisition before. Softbank, Flipkart's main stakeholder, however, had some apprehensions over a deal with Amazon. This is where SoftBank suggested that it was open to investing another $3-4 billion in Flipkart, which would be deployed to buy shares from smaller investors and help it maintain around 20% stake in the combine with Amazon.

The booming India e-commerce market is estimated to have touched $33 billion in 2017-18. Flipkart, which controls a 39 per cent share of India's ecommerce market, compared with Amazon's 30 per cent, ...

"We have been deliberate and thoughtful, we were not slow to respond", she said. The company was trying to buy 51-55% of Flipkart at the time.

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