For Amazon, deal with Flipkart was a non-starter, and how
American e-commerce major Amazon, which reportedly matched rival W al mart’ s bid and put in an additional $2 billion as break-up fee in an effort to take Flip kart, may have known quite well the deal was a non-starter, people in the know said. But the Jeff Bezo s-led company continued to stay in the game. Sources who described themselves as having “front row seats” during the deal gave a series of behind-the scenes details to put things in perspective.
According to one such source, the two key movers at the Seattle-headquartered company watching the W al mart-Flip kart deal, which was announced in the first week of May, were Amazon Chief Executive Officer( CEO) Jeff Bezos and CEO Worldwide Consumer Affairs Jeff Wilke. Exactly one month before W al mart announce dade alto invest $16 billion for a controlling stake in Flip kart, there was action at Amazon, from Ben ga lu ru to Seattle.
It was April 8, a Sunday, when corporates, especially multi nationals, are not known to work in regular times. But this was an urgent piece of work. Around evening, a senior executive at Amazon India’ s Ben ga lu ru office sent an email to a Seattle-based official who would understand. The message that the Ben ga lu ru executive sent was about the chances that the Competition Commission of India( CC I) could approve an Amazon-Flip kart deal. After discussions with multiple law firms, the conclusion was that there was less than 0.5 percent chance that the CC I would approve such a deal. An emissary was already on a flight to convey the message in person. With that, the deal ended as far as Amazon was concerned. But, Amazon remained in deal talks.
Another source who watched things from close quarters said it had all started in January when New York-based Tiger Global partner Lee Fix el sent feelers to Amazon to consider acquisition of Flip kart. The company was suffering valuation mark downs, its customer base was not growing, and the‘ big ideas’ had stopped working.
By the end of 2017 after the launch of Billion, Flipkart’s private brand, Tiger Global, the biggest backer of India’s ecommerce daddy since 2010, had decided that the company founded by Sachin Bansal and Binny Bansal had to be sold. Fixel wanted to exit but not at a haircut. Amazon looked like a good bet. But Amazon was not inclined, but the persuasion intensified.
A third source pointed at how Tiger Global and SoftBank, the biggest investor in Flipkart jointly worked on a strategy to sell Flipkart. Masayoshi Son-led SoftBank had invested $2.5 billion
in Flipkart as recently as 2017, but it too wanted to exit. (It is another matter that after the Walmart-Flipkart deal, which meant SoftBank’s exit, Son said he needed a few more days to make up his mind.) People in the know believe Son wanted to set things right with an investment in Flipkart, after the Snapdeal low. But things did not go as expected.
So, according to the plan chalked out by the biggest investors, both Amazon and Walmart were wooed to consider buying Flipkart, sources said. Stories and counter-stories followed, including those of Amazon offering a $2-billion break-up fee. There was no
denial by anybody.
At Amazon, neither Jeff Bezos nor Jeff Wilke was keen. And not at all after the legal assessment of how the CCI would react. Amazon India head Amit Agarwal even gave interviews when the WalmartFlipkart talks were at their peak, saying the deal would be good for e-commerce and called the Bansals “missionary entrepreneurs”. He was critical of Flipkart’s strategy to focus disproportionately on smartphones.
Sources said Agarwal was not disappointed after learning that the CCI would not approve an Amazon-Flipkart deal. But it was a decision taken at the top
that Amazon would not deny anything related to deal talks with Flipkart. According to sources close to the biggest ecommerce deal in the world, the Amazon strategy of not denying anything pushed the Walmart bill up. They added that while Walmart, which had refused a deal with Flipkart in 2016, would now focus on understanding the Indian ecommerce market, Amazon is charting out plans to go strong on a comprehensive vernacular strategy to provide a local hook.
The details could not be independently verified, and the companies concerned have refused to comment on the deal throughout the negotiations.