May 3: Walmart seems to have taken the pole position in acquiring Indian e-commerce giant Flipkart as per the latest developments. According to newly emerged reports, Walmart is all poised to acquire major share in Flipkart to bolster its operations in India.
The report comes amid late interest from rival Amazon, who has upped its interest in acquiring the major stake in Flipkart. Flipkart’s largest shareholder SoftBank was also reported to be inclined towards a merger with Amazon, with the company even said to be willing to make an investment worth $2billion to grab the shares from small investors in Flipkart.
Amazon was reported to have made an offer to buy 60% stake in Flipkart with a proposal to merge the latter completely with the Indian wing of Amazon. A non-compete agreement is also believed to have been included in the proposal with Flipkart’s founders for 1-2 years.
However, investors of Flipkart is said to be having a rethought about the proposal given the regulatory hurdles. Amazon’s acquisition plan is likely to be stumbled by Competition Commission of India on the backdrop that Flipkart and Amazon collectively grabs a major share, close to 70%, in the e-market space.
Walmart’s investment would include an infusion of over $12 billion in Flipkart, making the latter’s valuation stand close to $20 billion. The deal would also be the biggest for the global e-retail brand till date. The deal would also help the players in the form of resource pooling to tackle the dominance of Amazon both online and offline.
Walmart’s acquisition is also likely to alter the board with Walmart set to bag four of the ten seats on the board. However, the top management is likely to be left unchanged as per sources.