Earlier this week, Indian TV channel CNBC-TV18 reported that Amazon.com Inc has made a formal offer to buy 60 percent of Flipkart. The American company will buy 73% of Flipkart for around $14.6 billion in a cash-and-stock buyout, reported Factor Daily.
The Indian e-commerce major has paid a set of investors, including T Rowe Price and Valic, about $350 million to purchase 18,95,574 preference shares, in a transaction that closed on 27 April, a Paper.vc report said citing regulatory filings made by Flipkart in Singapore.
The deal will see Flipkart CEO Kalyan Krishnamurthy continue with the company, while one of the two founders, Sachin Bansal, might leave. Walmart also plans to develop a grocery marketplace using Flipkart.
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Walmart is now seeking a bigger stake than previously expected.
The latest developments suggest that there has been a divide at the top of Flipkart with the two co-founders taking opposite sides in deciding the future of Flipkart, the TOI report further said adding that Sachin's continuation would become untenable if the proposed deal with Walmart goes ahead.
Walmart would maintain a focus on the grocery market, said the sources, suggesting that nearly 50% of Walmart's initial investment would be funneled into building a food and grocery supply chain.
Walmart and Amazon's interest in gaining share in India comes after both retailers have struggled to grow in China, ultimately losing ground to Chinese e-commerce firm Alibaba Group Holding Ltd.
India is a fast-growing e-commerce market, now worth $27 billion and forecast to grow at 29.2 percent over the next four years, reaching $73 billion by 2022. Walmart may end up spending anywhere between $8 billion and $12 billion to buy a majority stake in Flipkart, and is expected to increase its shareholding in the online retailer in a phased manner.