While there are some sticking points are still being hashed out, the chances of a deal between the two Indian e-commerce rivals – Flipkart and Snapdeal, have improved after the Indian e-commerce firm Flipkart’s sweetened its takeover offer of up to $950 million for Snapdeal, reported the media quoting two sources familiar with the matter.
The sources said that the new proposal is being evaluated by Snapdeal’s board after the leading homegrown online retailer Flipkart revised its offer for SoftBank-backed Snapdeal to between $900 million and $950 million.
As Snapdeal’s board was unsatisfied with the offer and the payment terms, Snapdeal had earlier this month rejected Flipkart’s initial bid of between $800 million and $850 million, the media had earlier reported
While Flipkart’s revised offer does not include its logistics arm Vulcan Express and digital payments unit FreeCharge, which may be sold separately, the offer that was made was for Snapdeal’s marketplace and its e-commerce solutions provider Unicommerce, reports the media quoting sources who did not want to be named as the discussions are not public.
After the consummation of a deal, Flipkart may withhold $150 million of the deal price for 12-24 months, sources said.
But there is continued discussions and negotiations to address the concerns of Flipkart and Snapdeal shareholders, sources reportedly said. Snapdeal’s biggest shareholder is Japan’s SoftBank.
One of the sticking points of the talks between the two Indian e-commerce giants was the retention of Snapdeal employees because while Flipkart plans to absorb Snapdeal’s employees, it has not given any assurances around levels of employee retention, said one of the sources. There are about 1,500 staff members employed with Snapdeal currently.
The sources also reportedly said that while the odds of a merger with Infibeam are slim, however still, the Snapdeal board is also, however, mulling listed e-commerce player Infibeam’s proposal to acquire the company.
There was no immediate information available about the details on Infibeam’s offer for Snapdeal. Sources confirmed that within the next 10 days, the board of Snapdeal is most likely to make a decision on the two offers.
And as it battles Amazon.com for a larger share of India’s booming online retail market, SoftBank wants to financially back the biggest home-grown e-commerce provider and therefore it is keen to see Snapdeal folded into Flipkart.
“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.”
As the reports became public on Tuesday afternoon, shares in Infibeam were trading 3.6 percent higher.
There were no immediate comments available from Flipkart, Snapdeal and some of its main backers. There were also no comments from SoftBank and Infibeam.
Sources also said that interest to purchase FreeCharge which was likely to be sold for between $70 million and $80 million, have also been shown by Axis Bank, India’s third-biggest private sector lender, top digital payments firm Paytm and a few others and these companies are in talks for the deal with FreeCharge.
While Paytm declined to comment, Axis Bank did not respond to requests for comment.
(Adapted from Reuters)