Walmart Set To Seal $15 Billion Flipkart Deal In Big Blow To Amazon

Walmart Set To Seal $15 Billion Flipkart Deal In Big Blow To Amazon

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by MICHAEL LARKIN, investors.com

 

Walmart (WMT) looks set to beat Amazon (AMZN) in their battle for control of Flipkart by paying $15 billion for a 75% stake in the Indian e-commerce giant, which was founded by ex-Amazon employees.

It's a done deal, according to Bloomberg. But Reuters reported the deal wasn't yet finalized, though it could be sealed in the next few days.

Walmart shares rose 1.5% on the stock market today. Amazon was 0.6% higher.

The proposed deal will reportedly see Flipkart's top shareholder, SoftBank Group, sell its stake of more than 20% via an investment fund. Google-parent Alphabet (GOOGL) is also likely to participate in that Softbank-related investment. The deal is expected to close in the next 10 days, though terms could still change.

Walmart and Amazon reportedly both had bid for a controlling stake in India's leading e-commerce company, at a valuation of about $20 billion.

Flipkart, founded in 2007, is India's most valuable startup. But it's not profitable. India is rapidly growing but it still has a relatively small middle class. Poor infrastructure complicates home delivery.

Former Amazon employees founded Flipkart, and SoftBank reportedly had favored a sale to Amazon. But Flipkart's board reportedly believes Walmart could close a deal more quickly and smoothly. An Amazon-Flipkart pact could face regulatory hurdles, because Amazon is already India's No. 2 online retailer. Another point in discount giant Walmart's favor is its apparent willingness to let Flipkart founders Sachin and Binny Bansal continue to help lead the business.

Amazon Blow

Amazon has committed $5.5 billion to India. Founder Jeff Bezos is keen to become the leader in the market of 1.3 billion people. The giant has already lost the Chinese market to Alibaba (BABA) and JD.com (JD).

Amazon and Walmart are in a knockdown, drag-out clash, trading punches in an escalating retail war with the lines blurring between online and offline.