Snapdeal-Flipkart deal hits another roadblock

Looks like Snapdeal and Flipkart will take some more time before they announce their official merger. Snapdeal's board has rejected a buy-out offer of roughly $700-800 million from rival Flipkart, creating a new hurdle in the proposed deal, Livemint reports.

Apparently, Flipkart had made the new offer- considerably lower than the initial bid of $1 billion- after completing its commercial and legal due diligence of Gurgaon-based Snapdeal. However, Snapdeal's board members rejected the new bid. However, this isn't the end of the road. Negotiations will continue but the differences over Snapdeal’s valuation will delay the process.

According to the sources, the final price, and the fate of the deal, now depend on negotiations between SoftBank and Tiger Global Management, the two largest shareholders in Snapdeal and Flipkart, respectively.

Flipkart, which had an exclusivity to make a formal offer till July 3rd, had appointed global professional services firm EY to conduct the due diligence on its behalf, while Snapdeal had hired Deloitte.

Snapdeal's sell-out journey has seen many ups and downs so far. While SoftBank had been pushing for a sale since March, the two co-founders Kunal Bahl and Rohit Bansal, as well as key shareholders namely Kalaari Capital and Nexus Venture Partners, were not keen on the sale in the beginning. When they were finally convinced, smaller shareholders in Snapdeal, including billionaire Azim Premji’s investment firm PremjiInvest expressed their concerns regarding it, further delaying the proposed sale.

The cash-strapped online marketplace is finding it tough on other fronts too and has been negotiating with multiple parties for sale of its other major business units - digital payments platform FreeCharge and logistics arm Vulcan Express. According to ET, Paytm, which is still in discussions to buy FreeCharge, is now negotiating for "a much a lower price" than the earlier expectation of $40-50 million. For Vulcan, it could be a three-horse bid with TVS Logistics, Future Supply Chain Solutions, and Flipkart all in the picture.