After Snapdeal's board reportedly rejected Flipkart's $850
million (roughly Rs. 5,505 crores) takeover offer, the two parties are now
holding parleys over the $150-200 million valuation gap.
According to sources privy to the development, Flipkart had
initially offered $1 billion (roughly Rs. 6,476 crores) for the deal but post
the due diligence, it made an offer for $800-850 million.
The offer was rejected by Snapdeal's board as it felt the
amount undervalues the company as the due diligence report is clean, one of the
sources said.
"However, the deal isn't off and negotiations will
continue. The differences over Snapdeal's valuation could delay the
process," they added.
Emails sent to Snapdeal, SoftBank and Flipkart did not
elicit response.
SoftBank, Snapdeal's largest investor, has been proactively
mediating the sale for the past few months. The board also has representation
from Snapdeal founders (Kunal Bahl and Rohit Bansal), NVP and Kalaari Capital.
EY, which was roped in by Flipkart to conduct a due
diligence on Snapdeal, submitted its report a few days ago, following which the
offer was made.
The deal between Snapdeal and Flipkart, if completed, would
mark the biggest acquisition in the Indian e-commerce space.
One of the leading contenders in the Indian e-commerce
space, Snapdeal has seen its fortunes falling amid strong competition from
Amazon and Flipkart.
Compared to a valuation of about $6.5 billion in February
2016, the sale to Flipkart could see Snapdeal being valued at a much lower
level.
SoftBank has already written off over $1 billion on
valuation of its investment in Snapdeal.
The deal has been in works for a few months now. SoftBank
saw initial hiccups in bringing early investors - Nexus Venture Partners and
Kalaari Capital - on board with the sale proposal. However, these firms later
agreed to the proposal.
But, PremjiInvest - an investor in Snapdeal that does not
have board representation - has recently written to the company seeking greater
clarity on the terms and sought equal treatment of shareholders for payouts
from the deal.
