Amazon Makes Formal Bid for Flipkart

Flipkart planning to go private with buying shares back from Small Investors

According to CNBC TV18 in India, citing sources, Amazon's offer is for 60 per cent of the Indian online store. While talks in April were centered on Walmart acquiring a minority stake, sources told Bloomberg it could increase to between 50% and 60%.

Walmart has said that it would retain Flipkart's current structure, keeping current CEO Kalyan Krishnamurthy at the company's helm. The report also said that Amazon was seeking a non-compete agreement with Flipkart.

The other major investors in Flipkart include Tiger Global Management, Accel, Naspers and Tencent, each of these investors has a representative on the board of the company, all of whom are in favour of the Walmart deal.

The Walmart global team may come to India soon to close the deal.

"We all knew that Amazon had been in the fray", reported CNBC-TV18's Kritika Saxena, "but what we are looking at now is that a formal offer has finally been made".

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's bid is likely to be on par with Walmart's bid for the Indian e-commerce company, CNBC-TV18reported.

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. That's before Amazon made its entry into this market, Walmart's deal with Bharti was called off in 2013 when Amazon was well established in India.

A spokesman for Walmart declined to comment, while Amazon said it does not offer comments on rumors and speculation.

The Flipkart deal would also propel the Bentonville, Arkansas-based retail behemoth to hasten its online expansion into remaining Asian markets, the sources added. Depending on how much Flipkart investors decide to sell, Walmart's initial stake could be higher than 55%. The bid also emphasizes the importance of gaining a greater foothold in online sales in India, a market expected to be worth $200 billion a year within a decade. Chasing a business started by two former employees suggests the $760 billion e-commerce giant is anxious by the idea of its main local rival joining forces with Walmart. A Walmart-Flipkart deal could lead to more intense price competition, retail consultants said.

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