Indian electronic commerce company Flipkart is negotiating with rival Snapdeal over its $1-billion (Rs 64.86 billion) buyout offer, which it had cut down to $850 million (Rs 55.1 billion), PTI reported on Wednesday. Snapdeal had rejected Flipkart’s toned down offer, which it felt undervalues the company.
Flipkart had made the reduced offer after receiving a report of an investigation into Snapdeal’s business. The two companies are now negotiating the $150-million difference in Flipkart’s rejected offer. While a deal is still possible, differences over valuation could delay the process, PTI said quoting sources close to the developments.
The two companies had struck a preliminary agreement in June. The deal is meant to slow down rival company Amazon’s growth in India. Flipkart’s acquisition plans hit a snag after the family of Wipro chief Azim Premji, which happens to be one of the smaller investors in Snapdeal, objected to special payments to certain shareholders including its two co-founders and two larger investors.
Under the proposed terms, early investors, like Kalaari Capital and Nexus Venture Partners, would receive $60 million in addition to their new equity in Flipkart, while founders, Kunal Bahl and Rohit Bansal, would get a combined $30 million. Officials at PremjiInvest sent a letter to the Snapdeal board in June, stating that the deal handing over money to this select group was not acceptable.
SoftBank, which is Snapdeal’s biggest investor, has been mediating the deal with Flipkart.
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