Amazon offers to buy 60 per cent stake in Flipkart

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If Walmart succeeded in buying Flipkart, the impact on Amazon could be intense price competition from a deep-pocketed competitor, retail consultants said.

Most Flipkart shareholders also preferred a cashout deal as against a shareswap with Amazon. While a competing bid could possibly raise Flipkart's valuation, thereby helping investors, Walmart is learnt to be determined to strike a deal with India's e-commerce poster boy. The Walmart global team may come to India soon to close the deal, the report added. Flipkart is now the biggest competitor to Amazon India in the booming e-commerce space in India, and together, the two companies control over 80 percent of the e-commerce market in the country. The e-Commerce giant also is offering a $2 billion breakup fee in recognition of the regulatory challenges the deal would face, and is seeking a non-compete agreement with the founders of Flipkart.

According to an ET report, the Bengaluru-based online marketplace has put $400 million in its pocket to drop down the number of shareholders to below 50 to be recognised as a private limited company in the Southeast Asian country.

The report follows reports of U.S. retail giant Walmart's $12 billion deal to acquire a 55 per cent stake in the Bengalure-based retailer, which is likely to be signed as early as next week.

The sources added that Sachin Bansal, founder of Flipkart, was in the USA last week to oversee final lap negotiations with Walmart. Softbank, Flipkart's main stakeholder, however, had some apprehensions over a deal with Amazon.

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This news is coming when Walmart is investing a big amount in Flipkart to Buy 52% -86% share in Flipkart.

The booming India e-commerce market is estimated to have touched $33 billion in 2017-18.

Amazon is the second-largest e-commerce player in India and Flipkart's primary rival. What the shareholding pattern is or what the structure of the deal is not known as yet.

Anyway, Flipkart's investors and founders are leaning towards Walmart's bid and the Sachin Bansal (Flipkart's founder) has already been in the United States to negotiate with Walmart's execs. The buzz is that the American company could bag four of the 10 seats on the board but the top management is not expected to change.

"We have been deliberate and thoughtful, we were not slow to respond", she said.