Indian e-commerce firm Flipkart's board is yet to finalise a deal to sell a controlling stake to Walmart Inc, two sources with direct knowledge of the matter said on Friday, adding a deal could just be days away.

Bloomberg reported earlier on Friday, citing unidentified sources, that Flipkart's board had approved a deal to sell a stake of about 75% in the company to a group led by US retail giant Walmart for about $15 billion.

A third source told Reuters that while Flipkart's board had "in-principle" approved engaging with Walmart based on the terms of an offer before them, taxation-related concerns and a few other issues need to be resolved.

The first two sources said Alphabet Inc is also likely to invest in Flipkart alongside Walmart, but terms of the deal may change. Japan's SoftBank Group, the biggest investor in the Indian firm through its private equity fund, is considering selling its roughly 20% stake as part of the deal if the price is right, two other sources said.

"SoftBank does not like to be a passive investor," one of the sources said.

Reuters had previously reported Walmart was in advanced talks with Flipkart to acquire a controlling stake in the Bengaluru-based online marketplace at a valuation of at least $18 billion.

Flipkart has bought back $350 million worth of shares from its investors as it seeks to convert its Singapore-incorporated company to a private limited firm, in a move that could ease the way in for a new strategic investor, regulatory filings show.

Flipkart and Alphabet did not respond to Reuters' requests seeking comment. Walmart and SoftBank declined to comment.

AMAZON OFFER

Earlier this week, Indian TV channel CNBC-TV18 reported Amazon Inc had made a formal offer to buy 60% of Flipkart and that it had also proposed a $2 billion breakup fee to convince Flipkart to discuss its offer.

Sources told Reuters that Amazon had shown an interest in buying Flipkart, but said a deal with Walmart was much more likely to go through. Amazon is Flipkart's biggest rival in India.

Amazon's move to bid for Flipkart may push up valuations of the Indian firm, but engaging with the tech giant could be fraught with risks for Flipkart, said industry insiders and lawyers.

Beyond the risk of opening its books for due diligence and exposing sensitive commercial agreements to its biggest rival in India, an Amazon-Flipkart combination could face significant antitrust hurdles, they said.

Amazon is currently seeking legal opinion to understand how the country's antitrust regulator, the Competition Commission of India (CCI), is likely to view any deal with Flipkart, a lawyer and an industry source familiar with the matter told Reuters.

A former senior CCI official said e-commerce firms were already giving deep discounts and an Amazon-Flipkart union was likely to be in a position to sway the market their way, but the CCI could be convinced to approve a deal if both firms suggested "innovations or remedies."

"This definitely would be a tricky case and not easy to sail through," he added.

Flipkart, together with its fashion units Myntra and Jabong, controls nearly 40 percent of India's online retail market, while Amazon is a close second with a 31% share, according to data from research firm Forrester.

Both Amazon and Flipkart are pouring billions of dollars into winning shoppers in the fast-growing market that is expected to be worth $200 billion within a decade.

First Published:May 4, 2018 5:10 PM IST