If you’re waiting for the Snapdeal-Flipkart merger to take place with bated breath, then there is a good chance that you might just run out of air. According to latest developments, the merger is most likely to fall apart as a crucial meeting between the representatives of the two parties was recently quashed at last minute.
The news comes just a few days after troubled e-commerce marketplace Snapdeal sold its digital payments platform Freecharge for a whopping Rs 385 crore. The cash inflow from the deal can give Snapdeal the much needed breather it required to survive on its own, at least for a while.
According to a July 28th Moneycontrol report, immediately after the Freecharge-Axis Bank came to a close, Snapdeal founder and chief executive officer Kunal Bahl made his mind clear to the employees that he was not in the favour of being acquired by Flipkart.
In a letter written to his employees, the Wharton graduate wrote that now that the Freecharge responsibility is off their shoulder, it is now time to “focus energy and passion on continuing the Snapdeal journey.” The letter is testimonial that Bahl still has confidence in Snapdeal.
The Snapdeal-Flipkart deal is being enthusiastically pursued by Snapdeal investors, following the cut-throat competition the company is facing in the country from global ecommerce giant Amazon and its domestic rival Flipkart.
Taking into account the feelings of Snapdeal founders towards Flipkart’s second offer term sheet clauses, the Snapdeal board has now decided to let the company’s stakeholders take a decision on whether they want to accept Flipkart’s merger offer or not. According to experts, it is unlikely for all the stakeholders to take a united decision as even the seven member board of the company hasn’t been able to make a combined decision on the issue.
Snapdeal founders are in favour of sustaining the ecommerce company, either on its own or by entering into a strategic partnership with Infibeam.
Snapdeal currently also have a merger offer from Ahmedabad-based Indian internet and e-commerce conglomerate, Infibeam on the table. Though Infibeam founder and MD Vishal Mehta has denied that any offer has been made but as we know there’s no smoke without fire. Reportedly, Infibeam has even furnished a term sheet, which has valued Snapdeal at USD 1billion, which was the initial asking price asked for the e-commerce marketplace.
The troubled e-commerce player received a total of two offers from the Indian ecommerce leader Flipkart for an all-stake acquisition in July. Snapdeal rejected Flipkart’s initial $850 million buyout offer as Snapdeal’s board felt that the offer made by the ecommerce leader undervalued their company. But, now it seems the board is not happy with Flipkart’s second offer of around $900 million-$950 million as well that came around last week as they think it is still below their expectation of $1 billion.
It was also revealed that it is not a negotiation on just the financials of the deal anymore, Snapdeal isn’t happy with the term sheet furnished by Flipkart as well as they think it is laced with a lot of ‘hold backs’ and ‘clauses.’
According to a source close to Snapdeal, the ecommerce founders are currently leaning more towards the Infibeam merger offer as not only is the price good but they will also get to retain their positions even post the acquisition which is something Flipkart isn’t open to negotiating.