In a startling development, Reliance Retail has offered to sell their 35-40% stake to Amazon, for whooping $20 billion.
At their last round of funding by Silver Lake, Reliance Retail was valued at $57 billion.
If Amazon agrees to the offer, and buys upto 40% stake in Reliance Retail for $20 billion, then it would be retail market’s biggest ever stake sale in India, and make Amazon the undisputed leader in the market.
Will Amazon say yes?
Reliance Retail To Amazon: Give $20 Billion, Take 40% Stake
As per an exclusive report by Bloomberg News, Reliance Retail is willing to sell $20 billion worth of stake to Amazon, World’s biggest online shopping portal.
The report states that negotiations between Amazon and Reliance Retail are currently on, and it seems that Amazon has shown some initial interest.
Reliance Retail, which was already India’s #1 offline retailer, has further cemented their position in India after buying retail business of Future Group, and now owns Big Bazaar and other brands.
How Much Stake Will Amazon Get?
Recently, private equity investor Silver Lake invested $1 billion into Reliance, at a valuation of $57 billion.
Since the stock price of Reliance Retail is hovering around Rs 2100, analysts felt that this valuation is low, and were expecting around $80-90 billion valuation of the company.
None the less, if we take this valuation, then for $20 billion investment, Amazon can get upto 35-40% stake in Reliance Retail.
And if this happens, then Amazon will become India’s #1 retailer, since they will control almost 40% of Reliance Retail, and combined with their own network and reach of online retail, they will become unbeatable.
But Walmart Too Can Invest In Reliance Retail
Early in the month, rumors came in that Walmart can buy a minority stake in Reliance Retail, and this gave birth to speculations that Reliance and Flipkart can join forces to beat Amazon.
But now, with Reliance opening up the floodgates for Amazon, the equations have drastically changed.
We will keep you updated, as more details come in
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