The Flipkart-Snapdeal proposed merger has hit yet another snag. According to numerous reports, Snapdeal board has rejected an offer of about $700-800 Mn from homegrown ecommerce major Flipkart for the proposed deal.
The development comes just a few days after Flipkart completed its commercial and legal due diligence of Snapdeal.
As per Livemint, post completion of eight weeks of due diligence Flipkart made the new offer of about $700-$750 Mn last week which was ‘significantly lower’ than $1 Bn bid which it initially made. A report by Moneycontrol mentions that Flipkart has offered $550 Mn valuation to Snapdeal for an all-stock acquisition, while ET, cites deal value proposed by Flipkart to be around $800-900 Mn.
The offer made by Flipkart is just for Snapdeal’s marketplace and will not include Freecharge and Vulcan – the two will be separately sold.
However, citing sources, the report mentioned that the deal isn’t off at the moment and the negotiations will continue but valuation differences between the two companies are likely to delay the process. At the moment it’s unclear if and when, Flipkart will make a new offer.
The new offer is expected to be ‘more palatable to Snapdeal’s minority investors’, which includes, PremjiInvest, Ratan Tata, Ontario Teachers’ Pension Plan and BlackRock, among others.