Amazon.com, Inc. has made a formal offer to buy a 60% stake in Indian online retailer Flipkart, CNBC-TV18 reported on Wednesday, threatening to complicate Walmart, Inc.'s bid to buy a majority stake in the Indian e-commerce player.
Sources told Reuters earlier this month that Walmart was likely to reach a deal to buy a majority stake in Flipkart, Amazon's biggest competitor in India, by the end of June, for $10 billion to $12 billion.
The deal would be the US retail giant's biggest acquisition of an online business and kick off a battle with Amazon in an Indian e-commerce market that analysts forecast will be worth $200 billion a year within a decade.
CNBC-TV18 reported that Amazon had offered Flipkart a break-up fee of $2 billion to convince it to discuss an offer that analysts say would bring with it substantial antitrust challenges, as Flipkart and Amazon dominate the online shopping space in Asia's third-largest economy.
Past Approach Vetoed
Two sources close to the matter, asking not to be named, confirmed to Reuters that Amazon was interested in buying Flipkart, but declined to give further details.
One of the sources said that Flipkart had vetoed an approach from Amazon for a 51%-55% share in the company two years ago, judging its offered price as far too low at the time.
"Now with Walmart in the mix, things are different," the source said. "To the best of my knowledge, no decision has been made yet. There is no deadline, per se."
CNBC-TV18, citing unnamed sources, said that Amazon's new bid was likely to be on a par with Walmart's, but that Flipkart's investors and founders continue to favour the deal with Walmart, with founder Sachin Bansal overseeing final negotiations.
A spokesman for Walmart declined to comment, while Amazon said that it does not offer comments on rumours and speculation.
Flipkart did not immediately respond to an email seeking comment.
Worldwide Moves
Walmart's urgency to stem market share losses to rivals like Aldi or Amazon has also seen it launch talks to merge its UK arm, Asda, with J Sainsbury, in which it will hold a minority stake.
It also marks a shift in Walmart's traditional approach of building a business on its own.
Overall, sales from Walmart International, which runs about 6,300 stores globally, stood at $118 billion in the fiscal year ended 2018, down nearly 14% from $136.5 billion in 2014.
This was in large part due to adverse currency movements, which hurt the money repatriated from its foreign arms, but also because of a series of missteps in major markets.
International Performance
In an effort to fix its international performance, in January, Walmart appointed chief operating officer Judith McKenna to run its international unit and has indicated that it will focus on its core North American markets and growth markets like China and India.
Walmart initially entered the Indian market in 2007, through a joint venture with India’s Bharti Enterprises, years before Amazon arrived.
That joint venture was called off in 2013, but it still owns 21 wholesale cash-and-carry supermarkets in the country.
In an interview with Reuters on Tuesday, McKenna said that India is a "growth market" and downplayed analyst criticism that the company has been slow to move in the country.
"We have been deliberate and thoughtful. We were not slow to respond," she said.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
