Snapdeal sale around corner as Jasper okays Flipkart offer
27 July 2017
The board of Jasper Infotech, which owns online marketplace Snapdeal, has accepted a $900-950 million buyout offer from bigger rival Flipkart, reports today said, paving the way for perhaps the biggest acquisition in the Indian ecommerce space.
The buyout deal is almost through but the board wants to take a broader consensus from major its shareholders including Ratan Tata and PremjiInvest, reports said.
PremjiInvest, which is the personal investment arm of Wipro chairman Azim Premji, has written to Snapdeal seeking greater clarity on the deal terms. It has also called for equal treatment of shareholders for payouts from the deal.
Snapdeal's co-founders Kunal Bahl and Rohit Bansal are reported to be resisting the latest acquisition bid from rival Flipkart. They instead want to merge with listed e-commerce firm Infibeam. However, Infibeam has denied these speculations as 'baseless'.
SoftBank, which is the biggest investor in Snapdeal, is keen to finalise the deal and take an equity stake in Flipkart.
The merger of the two competitors can create a stronger local company to fend off Amazon, which is aggressively investing in the country in its bid to become number one player in ecommerce segment, which Flipkart currently leads though not by a big margin.
Snapdeal has a number of investors including Ontario Teachers' Pension Plan, PremjiInvest, Ratan Tata, Foxconn, Temasek and BlackRock among others.
In a related development, Jasper Infotech has virtually clinched a separate agreement to sell its payments platform Freecharge to Axis bank for Rs350-400 crore in an all-cash deal.
Flipkart had initially made an offer of $800-850 million, but Snapdeal was not keen on pursuing it as the company felt that the sum quoted was lower than its $1 billion valuation. Later, Flipkart revised the offer to $900-950 million.
If the deal happens, early investors in Snapdeal such as Nexus Venture Partners and Kalaari Capital are likely to receive payouts worth $150 million.
The company needs to take all investors as well Bahl and Bansal on board before it can finalise the deal.
According to reports, the Flipkart Board will be meeting this week to discuss the details of the proposed buyout.
Snapdeal has been facing a lot of pressure to sustain amid bleeding finances. Earlier this year, the company had announced its intention to trim its workforce by laying off nearly 600 employees.
Snapdeal's challenges are reflective of the stiff competition in the ecommerce market in India, which has been heavily based on sales driven through discount offers.