Flipkart-walmart deal on track but Amazon still in fray

MUMBAI: Even as Walmart Inc. inches closer to a deal to buy a majority stake in Flipkart, the board of India’s largest online retailer will keep Amazon as an alternative suitor in case the proposed sale to Walmart falls through, two people familiar with the matter said.

Flipkart’s key shareholders, Tiger Global Management, Softbank Group and others are keen to continue negotiations with Amazon until a deal is finalized either with Walmart or Amazon, the people cited above said on condition of anonymity.

Though Walmart remains in pole position to buy a majority stake in Flipkart, Amazon may still end up pipping Walmart by offering a higher price, the people said.

A deal between Walmart and Flipkart is more likely because a potential alliance between Amazon and Flipkart would almost certainly attract the attention of India’s anti-trust regulator.

Walmart is in advanced talks to buy more than 55% of Flipkart through a mix of primary and secondary share purchases. While the primary transaction is estimated to value Flipkart at $20-21 billion, the secondary share deal could happen at a price that is 20-25% lower, the people said.

Tiger Global, Naspers, Accel Partners, IDG Ventures and others are expected to sell much or all of their holdings in Flipkart, they said. Softbank, the company’s largest investor, is also expected to offload at least some of its stake in Flipkart, the people cited above said. Softbank had invested more than $2.5 billion in Flipkart last year.

The terms of the deal between Walmart and Flipkart haven’t been finalised.

Amazon did not respond to an email seeking comment. Flipkart and Walmart declined to comment.

The talks between Walmart and Flipkart have been reported by Mint and other publications since February. Mint had reported on April 4 that Amazon was preparing to submit a rival offer to buy a majority stake in Flipkart. Amazon entered the race later.