Online marketplace Snapdeal has rejected the takeover offer by rival e-commerce retail giant, Flipkart. According to reports, Snapdeal has rejected the $800-900 million dollar offer as board members were dissatisfied with the quoted price. “The board is unhappy with Flipkart pegging the valuation nearly $200 million less, even though Snapdeal cleared the due diligence. The board is, however, hopeful Flipkart would reconsider the offer,” a source told Business Standard.
Flipkart had an exclusivity period to make an offer by July 2. Reports say the negotiations are expected to continue as Flipkart’s offer was only for Snapdeal’s marketplace and does not include the organisation’s logistics business Vulcan and it’s payments arm Freecharge.
The merger deal is being spearheaded by Japanese telecom major SoftBank. As per a report by Economic Times, SoftBank is expected to invest about $1.5-2 billion in Flipkart, once the Snapdeal acquisition is closed.
Snapdeal is reportedly ready with a Plan B. “The board might look at other buyers or finally give the go-ahead to Snapdeal’s plan. The company might sell its sister concerns such as the logistics arm Vulcan Express and FreeCharge, run some of the operations and work towards an exit. It all depends on Flipkart’s next move,” sources informed Business Standard.
The deal has been in troubled waters as small shareholders in Snapdeal have reportedly expressed discontent over the sale. These include Azim Premji’s investment firm PremjiInvest.
Flipkart is expected to make a revised offer soon, reports say.