Snapdeal Board Rejects $850-Million Offer From Flipkart
The first offer has been rejected but talks are still on, said one person privy to the development.
Online retailer Snapdeal’s board has rejected rival Flipkart’s takeover offer which fell short of the $1-billion valuation that its biggest investor SoftBank Group Corp. had sought through the merger.
Flipkart made an offer of $850 million after completing due diligence on Snapdeal, two people familiar with the development told BloombergQuint. The offer was only for the marketplace and does not include logistics arm Vulkan Express and e-tailing solutions provider Unicommerce, the people said requesting anonymity as the talks are private.
The disagreement over deal size comes just weeks after billionaire Azim Premji’s investment firm PremjiInvest, one of the smaller shareholders, wrote to the board objecting special payments to certain shareholders, including its two co-founders and two early backers, according to a Bloomberg report citing people familiar with the discussions.
SoftBank had agreed to cut Snapdeal’s valuation 85 percent to $1 billion for the merger, Bloomberg had reported citing people it did not identify. The Masayoshi Son-led company has already written off over $1 billion on valuation of its investment in Snapdeal.
Snapdeal, Flipkart and Softbank didn’t respond to BloombergQuint’s emails.
Eyeing More Buyers?
Though the preliminary offer stands rejected, negotiations between the two companies are still on, the people quoted above said. If the negotiations fall through, Snapdeal may now look for other suitors given that the exclusivity period with Flipkart came to an end on July 2, the people said.
Snapdeal board has seven directors. Two boards seats are held by SoftBank, while Nexus Ventures and Kalaari Partners hold one each. Other board members are co-founders Kunal Bahl and Rohit Bansal and independent director Akhil Gupta, former vice-chairman of Bharti Enterprises.
Vani Kola, managing director of venture capital firm Kalaari Capital, which holds roughly 8 percent stake in the e-commerce venture, had resigned from the board in May.
SoftBank had pushed for the deal and persuaded the company’s two founders as well as venture backers Nexus Venture Partners to approve it.
Also Read: Flipkart-Snapdeal: Through The Looking Glass