India's biggest e-commerce company Flipkart has made a revised buyout offer of about $900 million (Rs 5,466 crore) for troubled e-tailer Snapdeal, a person privy to the matter told VCCircle.
The development comes after Snapdeal, operated by Jasper Infotech Pvt. Ltd, rejected Flipkart's offer of $700-$800 million earlier this month. Snapdeal had said the offer was significantly lower than its $1-billion valuation.
While Snapdeal’s e-commerce marketplace and seller service business Unicommerce are expected to be part of the deal, the company's board and management are engaged in talks with multiple parties for the sale of payments arm FreeCharge and logistics arm Vulcan Express.
“The company expects to sell both FreeCharge and Vulcan in the next 30 days,” said the person quoted above.
Several media reports pegged Flipkart’s revised offer at $850-950 million. The Mint newspaper reported that Flipkart will pay $650-$700 million in stock and the remaining $150 million at a later date.
VCCircle has sent queries to both Flipkart and Snapdeal seeking details.
Media reports suggested last week that Ahmedabad-based e-tailer Infibeam had also made an offer to buy Snapdeal after presenting a term sheet that likely valued the company, excluding Vulcan Express and FreeCharge, at $1 billion. However, the publicly-listed e-tailer denied any interest in acquiring the troubled Snapdeal.
The Economic Times reported, citing unnamed sources, that the Snapdeal board will consider both Flipkart’s and Infibeam’s offers and is expected to arrive at a decision over the next 24-48 hours.
However, the person cited above said it was unlikely that a decision would be taken any time soon. "The company would need more time to evaluate Infibeam's offer which came just last week,” the person explained.
While negotiations with Flipkart are at an advanced stage, inking the deal could still take several weeks as it involves various regulatory approvals and shareholder agreements.
“The board is still discussing. There are several open points which need to be resolved before the board presents the deal [the proposal to merge with Flipkart] to all shareholders,” the person added.
Meanwhile, top Snapdeal executives continue to maintain that there is possibility of the e-tailer going solo after selling FreeCharge and Vulcan Express.
Infibeam, which is no stranger to mergers and acquisitions, will definitely stand to benefit from a potential acquisition as Snapdeal’s consumer-facing arm could replace Infibeam’s present one, offering customers a wider selection and choice of products. Unlike other e-commerce firms that focus on business-to-consumer offerings, Infibeam is heavily focused on the business-to-business segment.
For Flipkart, the merger is important as Softbank’s proposed investment in it is contingent upon the deal.