Snapdeal board rejects Flipkart's $700-750 million buyout offer

The board of struggling online marketplace Snapdeal has rejected an offer of roughly $700-750 million from larger rival Flipkart, creating a new hurdle in a proposed deal that has attracted criticism from some Snapdeal shareholders, three people familiar with the matter said.

After completing due diligence on Snapdeal (Jasper Infotech Pvt Ltd), Flipkart made the new offer late last week, the people cited above said. That offer, which is significantly lower than Flipkart's opening bid of roughly $1 billion, has been rejected by Snapdeal, they said on the condition of anonymity.

The deal isn't off and negotiations will continue but the differences over Snapdeal's valuation will delay the process, they said. Flipkart's offer is only for Snapdeal's marketplace business; it doesn't include Snapdeal's payments arm Freecharge and its logistics business Vulcan, both of which are being sold separately, the people said.

The final price, and



the fate of the deal, now depends on negotiations between SoftBank Group Corp. and Tiger Global Management, the two largest shareholders in Snapdeal and Flipkart respectively, the people said. Apart from the proposed sale of Snapdeal to Flipkart, SoftBank is separately in talks to invest in Flipkart and buy a part of Tiger Global's stake in the online retailer.

Flipkart and Snapdeal didn't immediately respond to emails seeking comment.

The deal has hit hurdles right from the start. SoftBank has been pushing for a sale since March after Snapdeal lost out in the e-commerce war to Flipkart and Amazon India. Snapdeal co-founders Kunal Bahl and Rohit Bansal as well as two key Snapdeal shareholders, Kalaari Capital and Nexus Venture Partners, were initially opposed to a sale but SoftBank brought them around to pursuing the deal with Flipkart in May. Bahl, Bansal, Kalaari and Nexus are expected to receive cash payouts as part of the proposed deal.