Snapdeal rejects Flipkart takeover offer (yet another homegrown ecommerce major) of roughly $700-800 mn as per Livemint attracting criticism from its shareholders according to some people well acquainted with the matter.
The news comes just a few days after Flipkart completed its commercial and legal due diligence of Snapdeal. The reason for this rejection is said to be the revised bid, approximately $700-750 mn, by Flipkart as opposed to the initial bid of $1 bn.
The offer has is made 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 the table yet and will depend on negotiations between Softbank Group and Tiger Global Management, the majority stakeholders of Snapdeal and Flipkart respectively.
Also, there is an uncertainty prevailing in the market regarding the value of the proposed offer by Flipkart. The Economic Times report the buyout offer is estimated to be about $800-900 million, while PTI reported that the offer was in the range of $800-850 million. Snapdeal rejects Flipkart takeover offer (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. It reminds us of a number of Flipkart-Myntra stories during the time when that deal was happening, and it almost felt as if information was being leaked publicly in order to impact the deal.)
Snapdeal has been in a state of turmoil for months now with huge layoffs in its payment and logistics department, considerable paycuts, internal management shuffles, multiple top-level exits, phasing out of subsidiary units, and stake sales.
Should snapdeal have accepted the offer? Or was it foolish to turn it down amidst all the crisis? After all it is better to have something than nothing!! What do you think? Let us know your opinions on the issue in the comments section below.