Flipkart-Walmart deal talks in final stages

Flipkart sets aside $400 million for share buyback ahead of Walmart deal

On top of its offer to buy a 60% stake in Flipkart, Amazon is also reportedly offering a "breakup fee" of $2 billion for Flipkart to walk away from Walmart's offer.

They also revealed that based on how much Flipkart investors decide to sell, Walmart's initial stake could be higher than 55 percent. As part of the proposal, Amazon is seeking a non-compete agreement from Flipkart's founders. Furthermore, Flipkart founder Sachin Bansal recently visited the United States to negotiate with Walmart, and the retail giant may return the favour by visiting India soon to close the deal.

"The Flipkart board is considering Amazon bid but it does not cover the operating risk involved in pursuing such a transaction", said this source. Amazon's bid is likely to be on par with Walmart's bid for the Indian e-commerce company, CNBC-TV18reported. The Walmart-Flipkart combine also has the potential to make a global entity, by replicating the model outside India as well.

Legal experts say a Walmart-Flipkart deal will invite lesser questions and complications as compared to an Amazon-Flipkart deal, in particular with respect to the CCI. The Walmart-Flipkart deal would be Form 1 and an Amazon-Flipkart deal Form 2, said legal experts.

Discussions between India's largest e-commerce firm and Walmart have entered the final stage.

The e-commerce major's investors and founders are in favour of the deal with Walmart, according to the sources. As for why both US retail giants want a piece of Flipkart, India's e-commerce market is expected to be worth $200 billion annually in the next 10 years.

Led by Marc Lore, Jet's former CEO who now heads Walmart's e-commerce division, the retail giant bought e-commerce platform Shoebuy in January 2017, followed by outdoor apparel retailer Moosejaw in February, women's wear site Modcloth in March, direct-to-consumer premium menswear brand Bonobos in June, and last-mile delivery startup Parcel in September.

The transaction could be structured in such a way that Walmart increases its ownership in Flipkart over time, they said.

Binny Bansal and Krishnamurthy, a former executive at Flipkart's most influential shareholder Tiger Global Management, are likely to continue in their current roles after the deal, the people said.

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