The proposed acquisition of India-based, corporate-backed online marketplace Snapdeal by its chief competitor Flipkart has run into a roadblock due to Snapdeal’s founders favouring a rival offer by e-commerce firm Infibeam, LiveMint reported today.
Founded in 2010, Snapdeal has built an e-commerce platform that features more than 60 million products on offer, spanning a wide range of consumer items.
The company has raised more than $1.7bn from investors including telecom group SoftBank, e-commerce firms eBay and Alibaba, manufacturing services provider Foxconn, chipmaker Intel and mobile software provider Myriad, and was valued at up to $7bn as of February 2016.
Snapdeal had been locked in a fierce rivalry with Flipkart, before the latter pushed ahead in 2016, and the presence of US-based Amazon effectively squeezed it out of the market.
An acquisition by Flipkart has been on the cards for a few months now, mainly due to key investor SoftBank’s enthusiasm to become a shareholder of India’s dominant e-commerce brand.
Reports earlier this month suggested Snapdeal had turned down a nine-figure bid and was holding out for $1bn. SoftBank, which holds two of Snapdeal’s seven board seats, still favours a Flipkart purchase that would be sized at $850m according to LiveMint.
However, co-founders Kunal Bahl and Rohit Bansal are now leaning towards a $700m sale to the publicly-listed Infibeam or a substantial downsizing that would allow it to retain independence, both options, allowing them to keep control of the company, two people familiar with the matter told LiveMint.
Infibeam’s offer was made after Bahl and Bansal approached the company proposing a deal, the sources said. A Flipkart acquisition would mean both would have to Snapdeal.
The situation is further complicated by VC firms Nexus Venture and Kalaari Capital, which each also hold a board seat, having their own ideas about Snapdeal’s valuation, and by the likely sale soon of online payment subsidiary Freecharge, which would give Snapdeal extra funds to continue trading for longer.