Indian e-commerce firm Flipkart’s sweetened takeover offer of up to $950mn for Snapdeal has improved the chances of a deal between the two rivals, though some sticking points are still being hashed out, two sources familiar with the matter said.
Leading homegrown online retailer Flipkart has revised its offer for SoftBank-backed Snapdeal to between $900mn and $950mn, said the sources, adding the new proposal is being evaluated by Snapdeal’s board.
Reuters previously reported that Snapdeal had earlier this month rejected Flipkart’s initial bid of between $800mn and $850mn as its board was unsatisfied with the offer and the payment terms.
Flipkart’s revised offer was made for Snapdeal’s marketplace and its e-commerce solutions provider Unicommerce, but does not include its logistics arm Vulcan Express and digital payments unit FreeCharge, which may be sold separately, said the sources, who did not want to be named as the discussions are not public.
One of the sources said Flipkart may withhold $150mn of the deal price for 12-24 months after the consummation of a deal.
Both sources said negotiations to address the concerns of Flipkart and Snapdeal shareholders were continuing.
Japan’s SoftBank is Snapdeal’s biggest shareholder.
Flipkart plans to absorb Snapdeal’s employees, but it has not given any assurances around levels of employee retention, said one of the sources, noting that this was a sticking point in the talks. Snapdeal currently employs about 1,500 staff.
The Snapdeal board is also, however, mulling listed e-commerce player Infibeam’s proposal to acquire the company, the sources said, adding that the odds of a merger with Infibeam are slim. Details on Infibeam’s offer were not immediately available. Snapdeal is expected to make a decision on the two offers in the next 10 days, one of the sources said. SoftBank is keen to see Snapdeal folded into Flipkart and wants to financially back the biggest home-grown e-commerce provider as it battles for a larger share of India’s booming online retail market.
“Flipkart’s revised offer should settle the deal with Snapdeal in a few weeks time,” said Satish Meena, senior analyst at research firm Forrester. “There is nothing for SoftBank if Snapdeal goes and makes a deal with Infibeam.”
Shares in Infibeam were trading 3.6% higher yesterday afternoon. Flipkart, Snapdeal and some of its main backers were not immediately reachable for comment. SoftBank and Infibeam declined to comment. Axis Bank, India’s third-biggest private sector lender, top digital payments firm Paytm and a few others are in talks to buy FreeCharge which was likely to be sold for between $70mn and $80mn, one of the sources said.