INTERNATIONAL - Walmart looks likely to take the next round in the battle for India’s retail market over rival Amazon.com.
Flipkart Online Services, the country’s leading e-commerce company, is leaning towards selling a controlling stake to the Bentonville, Arkansas-based company, rather than Amazon, because of the greater certainty in such a deal, according to sources familiar with the matter.
Both US companies are bidding for a controlling stake in Flipkart at a valuation of about $20billion (R240.24bn), said the sources, asking not to be identified as the matter is private.
Flipkart’s board recently met to discuss the competing proposals and thinks Walmart could close a deal more quickly and smoothly, the sources said. Walmart faces fewer regulatory hurdles, because it has no online retail presence in the country now, while Amazon is the second-largest e-commerce player and Flipkart’s primary rival.
Flipkart founders, Sachin and Binny Bansal, also favour Walmart as they would continue to help lead the business, and the US company’s executives have emphasised their commitment to the market.
A Walmart deal has been discussed since at least last year and could still change or fall apart. SoftBank Group, Flipkart’s largest shareholder, may prefer a sale to Amazon, in part because of its success in cracking open the e-commerce business, one of the sources said.
Amazon founder Jeff Bezos has committed $5.5bn to India and his country chief, Amit Agarwal, has made progress by adapting the site to local conditions. Walmart, Amazon and Flipkart declined to comment.
Walmart is in talks to take a minority stake in Flipkart that could go up to 50 or 60percent, said the sources.
The amount will depend in part on which of Flipkart’s existing shareholders want to sell, including SoftBank and Tiger Global Management. Bloomberg reported last month that Walmart would likely pay about $7bn for one-third of the company.
If completed, the deal would give Walmart a major stake in an emerging market of 1.3 billion people. The US company is the world’s largest retailer, but it has struggled against Amazon as consumers increasingly migrate to online commerce.