INDIA - Last month, after almost a year of speculation, Walmart reportedly reached an agreement to purchase a controlling interest in Indian e-commerce platform Flipkart in a deal valued at somewhere between $10 and $12 billion. But this week, according to a report by CNBC affiliate CNBC-TV18, Amazon has tendered a competing offer—complete with a $2 billion “breakup fee” to cover the cost of a potentially scuttled deal.
“We all knew that Amazon had been in the fray,” reported CNBC-TV18’s Kritika Saxena, “but what we are looking at now is that a formal offer has finally been made. So far, Flipkart investors are holding out to see what Amazon has to offer.”
Sources report that, though Flipkart’s team favors the Walmart deal—in which Walmart would acquire a controlling stake of the company, but allow Flipkart to retain its current structure and management team—Amazon’s formal offer to purchase 60 percent of the company and “merge the companies entirely” may be a tempting alternative.
“Financially, the deals are pretty much on par,” continued Saxena, “but Amazon has offered a breakup fee…of about $2 billion, which essentially…if the deal doesn’t go through between the two players, if for some reason the deal is terminated, there is a breakup fee requirement.”
Amazon is also reportedly seeking a non-compete agreement with Flipkart’s founders of somewhere between one and two years.
Will Amazon’s offer oust Walmart as both companies compete for international marketshare? AndNowUKnow will continue to report.
