The hurdles in Snapdeal’s acquisition seems to be far from over. Now, the board of Snapdeal has rejected an offer of $800-850 million from Flipkart, according to the PTI report.
The board feels the amount undervalues the company as the due diligence report is clean.
However, the agency couldn’t verify the report from either of the involved party –Snapdeal, SoftBank and Flipkart as they declined to comment on the report.
“The first offer has been rejected but talks are still on. It is an ongoing discussion,” said one of the sources talking to PTI.
According to the report, Ernst & Young, which was roped in by Flipkart to conduct a due diligence on Snapdeal, submitted its report a few days ago, following which the offer was made.
SoftBank, the Snapdeal’s largest investor, has been proactively mediating the sale for the past few months. The board also has representation from Snapdeal founders (Kunal Bahl and Rohit Bansal), NVP and Kalaari Capital.
SoftBank has been pushing for the merger since start of the year. But, the transition has hit multiple hurdles as discord between board members hasn’t been ironed out.
Initially, it was stuck owing to disagreement between board members on special pay out for the deal. While the board members came along largely for a sale, most recently, the company also received back to back communications from minority shareholders – led by Premji Invest – asking for a fair treatment as proposed merger talks are underway.
One of the leading contenders in the Indian e-commerce space, Snapdeal has seen its fortunes failing amid strong competition from Amazon and Flipkart.
The immense markdown of valuation Snapdeal in just one year speaks volume about the lost competition in the ecommerce market.
Compared to a valuation of about $6.5 billion in February 2016, the sale to Flipkart could see Snapdeal being valued at about $1 billion. Besides, Snapdeal’s largest investor SoftBank has already written off over $1 billion on valuation of its investment in the company.
The deal between Snapdeal and Flipkart, if completed, would mark the biggest acquisition in the Indian e-commerce space.