Snapdeal founders would be able to retain control of the firm if the sale to Infibeam goes through.
There is a new twist in the tale of Indian e-commerce’s most awaited marriage. The Flipkart-Snapdeal merger has hit another roadblock it seems. A Mint report claims that Snapdeal founders Kunal Bahl and Rohit Bansal either want to stay independent or merge with Infibeam — Flipkart rival and the country’s only publicly listed e-commerce firm. However, Snapdeal’s largest investor Softbank, which actually triggered the merger conversations back in April, is still pushing for a Flipkart buyout.
Last week Flipkart made a revised offer to Snapdeal, valuing the company at $850-900 million. Its initial offer of $550 million had been turned down by the Snapdeal board. If Snapdeal continues to operate independently, it will result in massive job cuts and resizing. While Infibeam’s offer of $700 million is a tad lower than Flipkart’s, the founders would be able to retain control of the company if they sell out to the former, according to the report. BGR India has reached out to Snapdeal for comment. ALSO READ: Flipkart extends revised buyout offer to Snapdeal, values it at $850-900 million
For Softbank, Snapdeal has been a bad investment, and a sale to Flipkart — India’s most-valued e-commerce entity — would help it recover some of its losses. Flipkart’s initial offer of $550 million, however, had significantly de-valued Snapdeal and ticked off its minority investors, PremjiInvest (the personal investment arm of Wipro’s Azim Premji), Ratan Tata and BlackRock (asset manager), who were reportedly building consensus to block the deal.
In February 2016, when Snapdeal raised $200 million from a Canada-based venture fund, it had reached peak valuation of $6.5 billion. However, global e-commerce giant Amazon’s continued march in India and Flipkart’s steady sales growth (despite losses) turned Snapdeal into an also-ran. To top that, the company cut 600 jobs and also lost many mid-level managers. It has been scouting for a buyer for half a year now. ALSO READ: Snapdeal founders Kunal Bahl, Rohit Bansal’s letter to employees all but confirms sale speculations