Flipkart, the Indian eCommerce company moved to raise its offer of to up to $950 million for Snapdeal, boosting the chances of the deal going through.
According to a report in Reuters, citing two sources familiar with the matter, Flipkart increased its offer to between $900 million and $950 million, with the board at Snapdeal considering the sweetened proposal. A previous Reuters report pegged the price tag for the deal at between $800 million and $850 million, which Snapdeal’s board rejected. As a result of that rejection Flipkart upped the ante by offering more. Reuters noted the offer is for the company’s marketplace and its eCommerce solutions provider Unicommerce but not its logistics unit Vulcan Express and its digital payments service FreeCharge. Those two units could be sold separately, reported Reuters. One source said Flipkart could hold back $150 million of the deal price tag for one to two years after it is completed.
Reuters went on to report that Flipkart plans to absorb the employees of Snapdeal but hasn’t said how many of its workers it will keep. That, according to one source, is a sticking point in deal talks. Snapdeal employs 1,500, noted the report.
Earlier this month Reuters reported India’s second- and third-largest eCommerce firms, Flipkart and Snapdeal, have been in talks for months about a possible alliance to keep ahead of Amazon, but Snapdeal wasn’t quite ready to sell out to Flipkart – at least, not for less than the $1-billion valuation Flipkart had previously indicated. Snapdeal is operated by Jasper Infotech and counts Japan’s SoftBank as its biggest investor. Flipkart is backed by Microsoft Corp., China’s Tencent Holdings and online auction site eBay. A merger between the two Indian eCommerce firms would please SoftBank, granting it a large stake in India’s biggest eCommerce player if an all-equity deal were realized. And it would please Flipkart by giving it a boost in the race against Amazon.