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Walmart, not Amazon, will acquire Indian market leader Flipkart

Walmart, not Amazon, will acquire Indian market leader Flipkart

SoftBank reportedly was said to be in favor of the proposed Amazon deal.

While the USA retail giant has been in discussions with Flipkart for months now, the deal is likely to be announced in the coming days. The Flipkart buy may be one of the largest deals in the retail sector and the biggest in the e-commerce market. Citing figures from the India Brand Equity Foundation, Zacks reported that the Indian e-commerce market is project to grow from $38.5 billion last year to more than $50 billion this year, reaching $200 billion by 2026.

"CAIT demands government scrutiny of the Walmart-Flipkart deal".

Walmart is putting resources into fighting a tough battle against its online competitors, not least Amazon. Alibaba and JD.com are insurmountable in China and Walmart is also a partial owner of the latter. "Now that the rules are clearly written out, in any such transaction the 50% threshold is looked at and depending on the outcome and other factors such as treaty benefits, etc, the taxes are being paid and applicable reporting is also being made", Abhishek Goenka, partner and leader, corporate and global tax at PwC, told the Indian Express. In a sign of the high stakes involved, Amazon offered a $2 billion breakup fee to Flipkart to discuss a deal, published reports said. That report, courtesy of The Financial Times, indicates the company will acquire about 75% of Flipkart's shares, according to people familiar with the matter. The two co-founders had previously worked at Amazon. Most of Flipkart's existing investors are expected to sell off their entire stakes, though a few prominent investors, such as Flipkart's earliest backer Tiger Global Management, are expected to retain a small stake.

Flipkart has recently concluded a United States dollars 350-million buyback in Singapore to go private, pegging the valuation at over USD 17.6 billion.

Walmart also brings to the combination experience in areas such as groceries, said Satish Meena, senior forecast analyst at Forrester. Amazon already is the No. 2 online retail player in India, and regulators might frown on a combination with Flipkart - a situation that may have swayed Flipkart's board in the direction of a deal with Walmart.

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