E-commerce firm Snapdeal's board has approved rival Flipkart's revised takeover offer of around $900 million, people aware of the development told VCCircle. This sets the stage for the biggest-ever consolidation in India's e-commerce industry, with the two homegrown companies coming together to take on global major Amazon.
The development also brings to an end the protracted merger talks that began almost a year ago with Snapdeal sending feelers to Flipkart. VCCircle was the first to report on this.
The Snapdeal board will now consult other shareholders, and the deal is likely to formally conclude early next month, the people cited above said.
Snapdeal, which posed a challenge to Flipkart’s leadership in its prime, began losing traction after Amazon doubled down on its India expansion plans. Investors’ reluctance to pump more money into the troubled e-tailer decelerated it even more, forcing it to opt for a merger with Flipkart.
The discussions assumed greater seriousness early this year.
Snapdeal's biggest investor SoftBank, which is eyeing a sizeable stake in Flipkart, has orchestrated the merger, getting past divergent interests of other board members and founders’ brief flirtation with the idea of a merger with e-tailer Infibeam.
The board approval comes after not just a lengthy due diligence process and revised offer from Flipkart, but also numerous pacts between various stakeholders. Shareholders of Snapdeal will now have to approve the deal, said Reuters, which first reported the board approval.
PremjiInvest, a minority shareholder in Snapdeal, has not yet agreed to exit and is demanding a share swap.
People close to the development said the merger deal involves only Snapdeal’s marketplace, and the firm is looking for options for its subsidiaries such as FreeCharge and Vulcan Express.