Higher Flipkart offer ups chances over Snapdeal
Indian e-commerce firm Flipkart’s sweetened takeover offer of up to $950m for Snapdeal has improved the chances of a deal between the two rivals, though some sticking points are still being hashed out, two sources familiar with the matter said.
Leading homegrown online retailer Flipkart has revised its offer for Snapdeal, which is backed by SoftBank, to $900m$950m, said the sources, adding the new proposal was being evaluated by Snapdeal’s board.
Reuters previously reported Snapdeal had rejected Flipkart’s initial bid of $800m-$850m earlier in July as its board was dissatisfied with the offer and the payment terms.
Flipkart’s revised offer had been made for Snapdeal’s marketplace and its e-commerce solutions provider Unicommerce, but did not include its logistics arm Vulcan Express and digital payments unit FreeCharge, which might be sold separately, said the sources, who did not want to be named as the discussions were not public. One source said Flipkart might withhold $150m of the deal price for 12-24 months after the consummation of a deal.
Both sources said negotiations to tackle the concerns of Flipkart and Snapdeal shareholders were continuing.
Snapdeal’s biggest shareholder is Japan’s SoftBank.
Flipkart planned to absorb Snapdeal’s employees, but it had not given any assurances about levels of employee retention, said one of the sources, noting it was a sticking point. Snapdeal employs about 1,500 staff.
The Snapdeal board was also mulling listed e-commerce player Infibeam’s proposal to acquire the company, the sources said, adding that the odds of a merger with Infibeam were slim.
Details on Infibeam’s offer were not immediately available. Snapdeal was expected to make a decision on the two offers in the next 10 days, one of the sources said.
SoftBank is keen to see Snapdeal folded into Flipkart and wants to back the biggest homegrown e-commerce provider financially as it battles against Amazon.com for a larger share of India’s booming online retail market.
“Flipkart’s revised offer should settle the deal with Snapdeal in a few weeks,” said Satish Meena, senior analyst at research firm Forrester. Shares in Infibeam were trading 3.6% higher on Tuesday afternoon.
Flipkart, Snapdeal and some of its main backers were not immediately reachable for comment. SoftBank and Infibeam declined to comment.
BOARD ALSO CONSIDERS LISTED E-COMMERCE PLAYER INFIBEAM’S PROPOSAL TO ACQUIRE COMPANY