Walmart Inc is likely to reach a deal to buy a majority stake in Indian e-commerce player Flipkart by the end of June in what could be the US retail giant’s biggest acquisition of an online business, two people with direct knowledge of the matter said.
Reuters news agency reported last week that Walmart completed its due diligence on Flipkart and had made a proposal to buy 51 per cent or more of the Indian company for between $10 billion to $12 billion.
A deal with Flipkart would step up Walmart’s battle with Amazon.com for a bigger share of India’s fledgling e-commerce market, which Morgan Stanley estimates will be worth $200 billion in a decade. Local media have reported that Amazon is exploring a possible counter offer for Flipkart.
Both sources declined to be named as the talks are private.
Walmart will buy both new and existing Flipkart shares, with the new shares expected to value the Bengaluru-based firm at at least $18 billion, the sources said. The price for existing shares would value the firm at about $12 billion, one of the people said.
Japan’s SoftBank Group, which owns roughly one-fifth of Flipkart via its Vision Fund, is unlikely to sell any of its shares due to the low price being offered for the existing shares, this source said.
Reuters has previously reported that early investors such as Tiger Global, Accel and Naspers will likely sell their entire stakes in Flipkart to Walmart if a deal is reached.
A deal is not yet finalised, and talks between Walmart, Flipkart, and its investors are ongoing, one of the people said.
Flipkart also counts eBay, Tencent Holdings, and Microsoft Corp among its investors.
Flipkart did not respond to a request for comment, a representative for Walmart in India also declined comment while SoftBank said it doesn’t comment on speculation.