Amazon.com, Inc. (NASDAQ:AMZN) is considering making a rival offer to purchase Indian e-commerce firm Flipkart. The ecommerce site is currently in talks with Walmart Inc (NYSE:WMT) and the two U.S. retail companies jostle for dominance in India’s growing online industry. The stock of Amazon gained 1.33% to close at $1,410.57 in yesterday’s trading session.
According to daily newspaper Mint Amazon had early exploratory talks with Flipkart in a move to strike a purchase deal but a deal will Walmart is more likely to be sealed. According to sources close and familiar with the matter, there is very little possibility of having an Amazon- Flipkart deal. The sources further added that a deal between Amazon and Flipkart may raise monopoly concerns because both Amazon and Flipkart dominate the e-commerce market in India. Amazon is yet to comment on the matter, so does Walmart and Flipkart.
Walmart is having talks to purchase over 40% of Flipkart in what could be one of its biggest overseas deals. If completed, the deal will give the world’s biggest brick-and-mortar retailer a lot of access to an e-commerce market, which has been estimated to be worth $200 billion in the next 10 years.
The deal will also represent a big challenge to Amazon in India, Asia’s third-largest economy. In a move to expand into online grocery delivery and beat competition, Amazon has announced a $5 billion investment in India.
Walmart is planning to purchase a majority stake in Flipkart through a combination of primary and secondary share purchases in a transaction that could value the Indian company at $21 billion.
Founded by former Amazon employees, Binny Bansal and Sachin Bansal in 2007, Flipkart controls almost 40 percent of the online retail market in India and is ahead of Amazon.
Just the founder of Amazon Jeff Bezos, the two started by selling books and quickly diversified and started selling smartphones through exclusive flash sales. The company currently competes with Amazon on almost all categories of products.
The success of Flipkart has attracted several heavy-pocketed and tech investors including online marketplace eBay, U.S. hedge fund Tiger Global Management, software maker Microsoft and Chinese technology company Tencent. The company was valued at $12 billion Japan’s SoftBank’s Vision Fund purchased around a fifth of the company for $2.5 billion.