Looking to take a majority stake of 51% in Flipkart, Walmart has completed a thorough due diligence process on the e-commerce firm Flipkart, as the US supermarket giant looks to take a controlling stake in the Indian company.
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According to media reports, Walmart has floated an offer proposal, made up of $10 billion to $12 billion for the stake. This would value Flipkart at some $20 billion, sources told Reuters last week.
A deal has not been finalised, said the source. Both Walmart and Flipkart have failed to comment on the purchase rumours.
Walmart’s interest in Flipkart first broke in February with reports that the American retailer was seeking a 40% stake in the Indian e-tailer, which is backed by the likes of SoftBank Group, Tiger Global, Ebay, Accel Partners, Naspers, Tencent Holdings and Microsoft Corp.
Despite earlier reports, an Amazon takeover of Flipkart is not likely, according to Reuters, citing a source. That would spark competition fears given that two firms already dominate India’s e-commerce market.
Flipkart, founded by former Amazon employees Sachin Bansal and Binny Bansal in 2007, controls nearly 40 percent of India’s online retail, ahead of Amazon, according to estimates by research firm Forrester.
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If Walmart were to invest in Flipkart, both would be better equipped to fight off Amazon’s dominance.
Walmart could aid Flipkart in developing its private label business, while the Flipkart deal would open up another market for Walmart take on its biggest US rival.
The Indian e-commerce market will be valued at $200 billion by 2028, according to JP Morgan.