The board of online marketplace Snapdeal has rejected an initial buyout offer, estimated at $800-900 million, from rival ecommerce company Flipkart, according to media reports.
Flipkart is likely to come back with a revised price to take over the troubled etailer.
“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.
As Flipkart’s exclusivity period to make an offer ended on July 2, reports say Snapdeal is now working on a standalone plan to sell company’s non-core businesses – logistics business Vulcan and payments arm Freecharge.
“While Flipkart is expected to make a revised offer to Snapdeal, the board of the company may look at selling assets like Freecharge, Vulcan Express post the end of exclusivity period. Snapdeal may also looking at other options to sell to if Flipkart doesn’t go through with the acquisition,” a person aware of the development told The Times of India.
Snapdeal’s largest investor SoftBank initiated the merger talks at the start of the year but the process is witnessing delay due to multiple hurdles. Apart from the disagreement between board members on special payout for the deal, minority stakeholders have also communicated their concerns over the deal.
Softbank is expected to invest about $1.5-2 billion in Flipkart once the acquisition is closed.