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Published: Sat, May 05, 2018
Tech | By Dwayne Harmon

Amazon offers to buy 60 per cent stake in India's Flipkart

Amazon offers to buy 60 per cent stake in India's Flipkart

A report by business TV channel CNBC TV18 said Amazon has offered to merge Flipkart with its India arm and had also offered to pay a break-up fee of $2 billion to affirm the seriousness of its gambit.

Amazon has made a formal offer to acquire a controlling stake in Indian e-commerce giant Flipkart, putting it in contention with Walmart, according to a report Wednesday on Indian network CNBC TV18.

Amazon's offer came at a time when talks about Walmart-Flipkart deal are still intact.

- In April, Reuters reported that Walmart was close to buying a majority stake in Flipkart for up to $12 billion. Reports suggest that the deal could be wrapped up sometime in June.

Flipkart's founder Sachin Bansal was reportdly in the United States last week to oversee final lap negotiations with Walmart, and the latter's global team is expected to come to India soon to finalise the mega deal. There are investors who would question Amazon about its investments.

Interestingly, Lore and the co-founders of Flipkart - Sachin Bansal and Binny Bansal - have all worked for Amazon in the past. "But even now, it should keep trying to avert the formation of giant rival", said N Chandramouli, CEO, TRA Research. The deal, in which Walmart will buy at least 55% stake may value the Indian ecommerce major at over $20 billion.

Flipkart is in the final stage of negotiations with Walmart, which is looking to buy a significant holding in the company. Amazon has already vowed to pour $5 billion into India and the efforts are already paying off.

In an effort to fix its worldwide performance, Walmart in January appointed Chief Operating Officer Judith McKenna to run its global unit and has indicated it will focus on its core North American markets and growth markets like China and India.

"The stakes are really high for Walmart", said Brian Yarbrough, senior research analyst with Edward Jones. It might not want to leave the game this early. Amazon was not immediately available for comment when contacted by CNBC.

SoftBank stands to make a tidy profit on a deal it cut a year ago. That stake could be worth more than $4 billion at the Walmart deal's valuation.

However, SoftBank and Tiger Global are the largest shareholders of Flipkart, followed by Naspers of South Africa.

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