Update: Managing Director of VC firm Kalaari Capital, Vani Kola has tweeted that the reports about Snapdeal rejecting Flipkart’s buyout offer are false. Kalaari Capital is one of the earliest investors in Snapdeal.
Rejected! Snapdeal dismisses Flipkart’s #ETBrandEquity. media and unethical false reporting. invest in startup that can filter fake facts
— Vani Kola (@VaniKola) July 5, 2017
Earlier: Snapdeal’s board has apparently rejected an offer worth $700-750 million from Flipkart, reports Livemint. This is markedly lower than the reported $1 billion offer Flipkart had initially made for Snapdeal’s business. However, looks like there is no consensus regarding the value of the latest offer, because according to this The Economic Times report the buyout offer is estimated to be about $800-900 million, while PTI reported that the offer was in the $800-850 million range.
(Nikhil adds: In either case, the story here is that the offer has been rejected – so far – and although it could be a part of a negotiation. I’m reminded of the number of Flipkart-Myntra stories during the time that that deal was happening, and it almost felt as if information was being leaked publicly in order to impact the deal.)
This offer was only for Snapdeal’s marketplace business, and does not include the payments business, Freecharge, or the logistics business, Vulcan Express. As per the report, the deal is not off yet, but will depend on negotiations between Softbank Group and Tiger Global Management, the majority stakeholders of Snapdeal and Flipkart respectively.
We’ve written to both Snapdeal and Flipkart to learn more about the specifics of the deal, and what will be their next step(s). We will update once we hear back.
Snapdeal, which had initially denied that it was in talks with Flipkart, laid off close to 600 people within the company’s logistics unit Vulcan Express, and in its payments division FreeCharge, in February this year. Employees were given three-month severance pay. Note that Snapdeal had acquired FreeCharge in 2015 for $450 million, and continues to maintain FreeCharge as a separate entity with an independent management team.
The company has been going through a rather rough phase with internal management shuffles, multiple top-level exits, phasing out of subsidiary units, and stake sales:
- DEN Networks and Snapdeal parent Jasper Infotech sold 100% stake in the jointly operated TV shopping channel, Den Snapdeal TV Shop to Pimex Broadcast Private Limited.
- FreeCharge’s CEO Govind Rajan quit the company after being promoted to the role in May 2016.
- Two top executives including Abhishek Kumar, the company’s head of corporate development, and senior vice president Sandeep Komaravelly put down their papers.
- Snapdeal shutdown its C2C handicrafts marketplace Shopo as well, which it had acquired for an undisclosed amount back in 2013.