As per incoming reports, key investors in Flipkart have provided their green signal for a merger with Walmart, ditching Amazon. However, as pointed out by leading analysts, eBay can pose a big trouble for the final agreement.
Meanwhile, Flipkart is about to announce a major partnership with a tech giant today. Which tech giant is it going to be? We will try to guess!
Is eBay The Obstacle In Flipkart-Walmart Deal?
Last year in August, Flipkart acquired eBay for $211 million, gave them a 5% share and raised $500 million in a complicated deal.
One of the features of this deal was a 4-year exclusive commercial arrangement, which covers merchandise being sold on Flipkart. Sellers on Flipkart get an exclusive window to contact more than 150 million buyers on eBay, and this contract ends after three years.
Now, if Walmart and Flipkart merge into one, then Walmart will have to talk and convince with eBay to break this exclusive contract for merchandise available on Flipkart.
Under the existing contract, Walmart won’t be able to buy any merchandise on Flipkart, except groceries.
Besides, the usage of eBay’s brand name by Walmart can also be an issue, because eBay had made it clear that if Flipkart gets acquired, the new buyer won’t be able to use their brand name.
Walmart is ready to pay $10-12 billion for acquiring 51% stake in Flipkart, and this is a big amount – They will seek complete control over all merchandise, and brand names associated with Flipkart.
Flipkart reported a loss of $1.4 billion against $3 billion revenues last year, and this fact can be used by Walmart to make a better deal with eBay.
As per another report, except SoftBank, all other investors are ok with Walmart.
A person close to the negotiations said,
“Discussions with SoftBank are still ongoing… Most of the others have come aboard. In a deal like this, there are always ebbs and flows, but there is a time factor to consider as well,”
One thing is sure: Despite offering a breakup fee of $2 billion, Amazon is clearly out of the race.
Flipkart Partnering With A Tech Giant?
Yesterday, Flipkart tossed a teaser to all e-commerce buyers, hinting that a major partnership with a ‘big tech giant’ will be announced today.
This comes at a time when Flipkart has partnered with Xiaomi to sell Xiaomi Mi TV 4A, Mi TV 4 on their platform. These products shall be also available at Mi.com
Flipkart CEO Kalyan Krishnamurthy said:
“Long-term partnerships have transformed the way India buys mobile phones. We are proud to enter into an exclusive partnership with a ‘tech giant’ to disrupt the mobile phone landscape in a big way. Get ready for two big announcements soon.”
No name was shared by Flipkart, regarding this partnership, which can ‘disrupt’ the mobile phone landscape.
Observers are guessing two names: Huawei or Motorola.
While Huawei is set to launch their P20 series, Motorola is expected to announce the launch of their Moto G6 mid-range series.
We will keep you updated, as Flipkart announces their partnership today.
Do share your guesses and opinions, by commenting right here!