Online shopping giants Flipkart and Snapdeal, have been under sales talks since months. Some of the recent reports have claimed that Snapdeal rejected Flipkart’s initial offer of $700-800 million to take over. Snapdeal is these days in trouble and Flipkart is expected to return with a revised offer.
On the other hand Snapdeal is looking forward to take things in control by selling off its assets like Free Charge and Vulcan Logistics. The companies Flipkart and Snapdeal had signed a binding agreement in May 2017 and at that time Snapdeal was valued at $1 billion. The agreement for exclusivity lapsed on July 2, 2017. The exclusivity had allowed the troubled comp any Snapdeal to work out plans , under which it planned to sell out the assets of the company.
People aware of the development have said that Flipkart is expected to make a new offer to Snapdeal. And if things do not work with Flipkart, Snapdeal will be looking forward to other offers as well. Japan based internet giant SoftBank holds 33% stake in Snapdeal and is also the largest share holder. Being a share holder, it has been talking to several players in the payments space to sell FreeCharge. FreeCharge is a product of payment business of Snapdeal and Vulcan is its logistics business. The latest offer by Flipkart was made after the valuation of Snapdeal through EY which was roped in for diligence of valuation.
On the other hand SoftBank has been pressurizing for the merger of Flipkart and Snapdeal since the beginning of 2017 but has hit several hurdles. The hurdles included a few disagreements between the board members. Snapdeal was once a tough competition to Flipkart and Amazon, but the competition in the market was ultimately lost by Snapdeal and was not able to raise fresh funds. In the past year, Snapdeal had to take several steps including shutting down the non-core operations and firing unwanted employees.