Amazon, Flipkart and Wallmart. - Techmidroid

Saturday, 12 May 2018

Amazon, Flipkart and Wallmart.

Amazon was about to enter the Indian market. Amazon offered about 500–700 Million US Dollars to Flipkart when the valuation of Flipkart was upwards of 1 Billion US Dollars. Obviously, the deal didn’t work out.
Amazon tried acquiring Flipkart and made an offer of 8 Billion US Dollars. This time, Flipkart was soaring high with a valuation of 15.5 Billion US Dollars. The offer by Amazon didn’t make any sense.
Both these times, Amazon tried to get a lowball deal with Flipkart by trying to acquire it at half the valuation, which, by the way, didn’t go well with the investors of Flipkart.
The early buzz was that Flipkart was in talks with Walmart to sell approx 75% stake for about 15–16 Billion US Dollars which would have given Flipkart a valuation upwards of 20 Billion US Dollars.

                                                                                                            Image Source: Beebom

They have valued the loss-making flipkart for around 1 lakh crore, even the total online business in India is still at 80000 crores. Well, it's hard to see that coming. There are 20 crore people working in small businesses. The online market which is just 3.5 percent now will become 20% when it comes to 2025. Figures indicate that by the arrival of 2030 it will reach 45%.

Amazon offered to buy 60% stake in Flipkart which would have valued Flipkart at 22 Billion US Dollars, and also offered 2 Billion US Dollars as a breakup fee (which Flipkart would have pay in order to back out of the deal with Walmart).
The Monopoly Rule
The combined Amazon-Flipkart entity would have more than 70% of market share which is against the market regulations. Even if Flipkart would’ve said yes to this deal, the deal wouldn’t have been possible.

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