The board of beleaguered e-commerce venture Snapdeal, operated by Jasper Infotech Pvt Ltd, has rejected a takeover offer of $700-800 million made by rival firm Flipkart, multiple media reports said.
Flipkart made the offer late last week, and it was “significantly lower” than its supposed opening bid of around $1 billion, the Mint newspaper reported citing three people aware of the development.
VCCircle could not independently verify the value of the buyout offer. Email queries sent to both Snapdeal and Flipkart have not elicited any response at the time of publishing this report.
A person aware of the development at Snapdeal told VCCircle that the exclusivity period for Flipkart to conduct due diligence has ended. This, presumably, opens up the possibility for other suitors to buy out Snapdeal. However, media reports suggested that the talks between Snapdeal and Flipkart are expected to continue. The Economic Times reported that the delay in closing this deal may adversely affect Japanese investor SoftBank’s anticipated $1.5-2 billion investment in Flipkart.
According to Mint, Flipkart’s offer is only for Snapdeal’s online marketplace business and does not include the mobile payments subsidiary FreeCharge or the logistics arm Vulcan. Tiger Global and SoftBank, the largest investors in Flipkart and Snapdeal, respectively, will take the discussions forward.
The deal has been facing hurdles for a while now. Earlier, Snapdeal’s early investors Nexus Venture Partners and Kalaari Capital were opposed to SoftBank’s offer to invest in the e-commerce firm and its mobile wallet subsidiary FreeCharge as it would have valued Snapdeal at $1 billion, a far cry from its peak valuation of $6.5 billion. The offer would have increased SoftBank’s stake in the e-commerce firm, while reducing that of Kalaari and Nexus.
SoftBank, which has pumped nearly $900 million into the startup founded by Kunal Bahl and Rohit Bansal, holds two seats on Snapdeal’s board, while Nexus and Kalaari hold one each.
Snapdeal’s other investors include SoftBank-backed Chinese e-commerce company Alibaba, Taiwanese contract electronics manufacturer Foxconn, e-tailer eBay Inc., media company Bennett Coleman & Co. Ltd, and venture capital investors such as Bessemer Venture Partners, Intel Capital, Iron Pillar, and Ratan Tata.
In August 2016, VCCircle was the first to report that Snapdeal was considering a merger with Flipkart.
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