Fri. Mar 29th, 2024
flipkart snapdeal merger

Over the last few months, unconfirmed reports have suggested Flipkart gearing up to buy Snapdeal for around ₹6500 ($1 Billion). However, according to the latest developments, Snapdeal board has rejected an initial offer by Flipkart. The offer, rejected by Snapdeal, offered to buy out the complete business and assets of the homegrown eCommerce company for ₹5500 crores ($850 Million).

Recently, there were reports which suggested that Flipkart had completed its due diligence of commercial and legal aspects of Snapdeal. The process of background check on Snapdeal took over 8 weeks and suggested no red flags about the company.

According to the sources directly familiar with the development, Flipkart is still in talks with Snapdeal and is expected to extend an updated offer in the coming days. On the other hand, Snapdeal is in talks to sell its digital payments business and logistics vertical to raise extra cash to fuel its ongoing operations. The company had recently raised ₹113 crores from a group of investors including its founders.

The merger, which was proted by Snapdeal’s largest stake holder Softbank, is expected to delay the proposed investment of Softbank in Flipkart. Also, this will delay the close of transaction for Softbank. Softbank has been trying to close its underperforming investments in the country, including Snapdeal, Ola and Oyo.

According to an agreement between Softbank and Flipkart, the Japanese investor will invest around ₹10,000 crores in Flipkart post the acquisition of Snapdeal. With the expected investment, Softbank will hold a substantial stack of Flipkart. Another international investor Alibaba, already holds a major stake in another eCommerce company, Paytm Mall.

By Prithviraj Singh Chauhan

Part time journalist, full-time observer. Editor-in-Chief at The Indian Wire. I cover updates related to business and startups.