Walmart-Flipkart merger deal hits eBay hurdle
Walmart acquisition talks with Indian e-commerce giant is expected to be completed by June, this year. The US-based retailer reportedly plans to invest around $12bn to acquire 51 per cent stake in Flipkart to combat rival Amazon in the Indian market.
However, to seal the deal, Walmart will likely have to first work out a deal with Flipkart’s investor and partner, eBay, reports Recode.
Last year, eBay sold its Indian business to Flipkart for $211 million in lieu of about 5 per cent stake and later invested approximately $500 million in the Indian e-commerce company. eBay also signed a four-year exclusive commercial arrangement to partner with Flipkart.
According to the deal, merchants who sell on Flipkart have access to more than 150 million new customers from eBay worldwide. The deal also provides eBay sellers outside of India with access to a new group of consumers inside of that country.
Due to this merger, despite getting control of Flipkart, Walmart may not be able to accomplish actual merchandise deals with Flipkart once it invests in it.
The potential obstacle for Walmart is that the eBay deal still has three years to go and is believed to cover all types of merchandise except grocery items, the report added.
Additionally, Flipkart reported a loss of Rs 8,771 crore ($1.4bn) in FY17, which may force. Walmart to think about a deal with eBay.
This is a new thread to Walmart-Flipkart acquisition story. The potential deal has been facing roadblocks due to another retail giant Amazon, who is also willing to acquire Flipkart. The US e-tailer had reportedly offered breakup fee of around $2 billion.
If the Walmart-Flipkart deal gets through, the SoftBank-backed etailer is likely to be valued about $20 billion. The deal will also give strong ground to Walmart in Indian e-commerce space and eventually also spruce-up retail giant’s position against an old local rival – Amazon in India.