Snapdeal Calls Off Deal With Flipkart, Says It Will Walk Alone
Snapdeal will compete alone in the Indian e-commerce market.
Snapdeal rejected a takeover bid from rival Flipkart Online Services Pvt., bringing to an end months of negotiations between the two Indian e-commerce companies.
The Jasper Infotech-owned Snapdeal will compete alone in the Indian e-commerce market, it said in an emailed statement on Monday. In addition, it will sell some none-core assets in order to be “financially self-sustainable”, the startup which is set to post a gross profit this month, added.
“We are already profitable at a gross profit level, with clear visibility to making upwards of Rs 150 crore in gross profit in the next 12 months,” Snapdeal founders Kunal Bahl and Rohit Bansal said in a letter to its employees.
SoftBank Group Corp., which holds nearly a third of Snapdeal shares, and Tiger Global Management, which holds a substantial stake in Flipkart, have been pushing the two rivals to merge to take on Amazon.com Inc.
“We respect Snapdeal’s decision to pursue an independent strategy,” SoftBank said in a statement on Monday. “We look forward to the results of the Snapdeal 2.0 strategy, and to remaining invested in the vibrant Indian e-commerce space.”
The development comes just three days after Snapdeal sold its digital wallet FreeCharge to Axis Bank Ltd. in a Rs 385-crore all-cash deal.
Deal Talks Fail
Snapdeal, which presently employees nearly 1,200 people, had been in talks with Flipkart for more than five months as Snapdeal’s largest investor SoftBank pushed for a sale. SoftBank had planned to invest close to $500-700 million in Flipkart as part of the deal.
Ever since, there has been continuous back and forth due to disagreement by board members and minority shareholders Nexus Ventures and Kalaari Capital. Later, there were differences over valuations of Snapdeal. SoftBank had thereafter agreed to reduce the valuation of Snapdeal from $6.5 billion to $1 billion, Bloomberg reported. Last month Flipkart had sent a revised offer of around $950 million after its previous offer of $850 million was rejected.
Just last week, Bloomberg reported that Snapdeal founders were resisting the acquisition bid.
“Snapdeal has been exploring strategic options over the last several months,” the company said in its emailed statement. It “has now decided to pursue an independent path and is terminating all strategic discussions as a result,” the statement added.
