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By Sumeet Chatterjee and Sankalp Phartiyal
HONG KONG/MUMBAI (Reuters) - Walmart Inc is likely to reach a deal to buy a majority stake in Indian e-commerce player Flipkart by the end of June in what could be the U.S. retail giant's biggest acquisition of an online business, two people with direct knowledge of the matter said.
A deal with Flipkart would step up Walmart's battle with Amazon.com for a bigger share of India's fledgling e-commerce market, which Morgan Stanley estimates will be worth $200 billion in a decade. Local media have reported that Amazon is exploring a possible counter offer for Flipkart.
Both sources declined to be named as the talks are private.
Walmart will buy both new and existing Flipkart shares, with the new shares expected to value the Bengaluru-based firm at at least $18 billion, the sources said. The price for existing shares would value the firm at about $12 billion, one of the people said.
Japan's SoftBank Group, which owns roughly one-fifth of Flipkart via its Vision Fund, is unlikely to sell any of its shares due to the low price being offered for the existing shares, this source said.
A deal is not yet finalised, and talks between Walmart, Flipkart and its investors are ongoing, one of the people said.
BIG INDIAN BATTLE
For Walmart, the world's largest retailer known for its superstores, a deal with Flipkart would open up the vast Indian market.
Walmart has for years tried to enter India but has remained confined to a 'cash-and-carry' wholesale business amid tough restrictions on foreign investment. It currently operates 21 such stores in India.
Flipkart's investors are concerned that any deal with Amazon would run into regulatory hurdles as a combination would have more than 70 percent of India's online retail market, one of the sources said.
Walmart's investment would give Flipkart not just additional funds to fight Amazon, but also arm it with a formidable ally with extensive experience in retailing, logistics and supply chain management.
Like Amazon's founder Jeff Bezos, they began by selling books, but have diversified rapidly, including by selling smartphones, such as those made by China's Xiaomi, through exclusive flash sales, and now compete with Amazon in almost all product categories.
(Writing by Miyoung Kim; Editing by Martin Howell)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)