Earlier, we reported that the acquisition offer made by Flipkart to Snapdeal worth around Rs 950 crore has been approved by the company’s board. However, the deal was not officially announced, and it seems that it may get called off.
As per the latest reports, Snapdeal founders Kunal Bahl and Rohit Bansal, have not agreed to the acquisition offer yet. However, the company is expected to make an announcement today.
People aware of the matter says that the company called a key meeting between Snapdeal and Flipkart, which is expected to continue today as well, to negotiate the offer.
As we earlier reports, the company’s founders are pushing to continue operate Snapdeal as an independent entity. However, the move will involve laying-off significant people from its staff of around 1,5000. The company will also have to cut the size of its business.
One of the major reason for the struggles of Snapdeal is not being able to raise funding round. With the recent sale of its online payments platform FreeCharge to Axis Bank, the company now has new capital of around Rs 385 crore.
Last week, it seemed like the Flipkart-Snapdeal merger would finally be completed. The board of online marketplace Snapdeal gave the go-ahead to the company to continue negotiations to sell itself to Flipkart, after rejecting the initial offer.
Flipkart had initially offered around $750 million for the deal, which was rejected by the Snapdeal’s board. Later, Flipkart submitted revised offer, increasing its offer to $900-950 million.
The company is expecting to send the proposal to its shareholders this week. Snapdeal has a number of investors, including Ontario Teachers Pension Plan, PremjiInvest, Ratan Tata, Foxconn, Temasek and BlackRock. Interestingly, PremjiInvest.
A few of those investors have already written to Snapdeal seeking greater clarity on the deal terms. It has also called for equal treatment of shareholders for payouts from the deal.
A 2016 report from accounting firm EY noted that e-commerce has grown at a compound annual growth rate of over 50 percent in the last five years in India and the pace of growth is expected to continue, with e-commerce sales topping $35 billion by 2020.