- Snapdeal reportedly accepts Flipkart’s revised offer of $950 million for the takeover
However, the deal still needs approval from Snapdeal’s shareholders.
The talks regarding a takeover by Flipkart have been going on for months, and it now emerges that Indian e-commerce brand Snapdeal has reportedly accepted the latest offer made by the large e-commerce giant. According to the Reuters report published on Wednesday, July 26, sources stated that the Jasper Infotech-led board of the loss-making Snapdeal finally gave in after Flipkart’s latest revised offer of $900-950 million, made last week, which is quite close to the initial asking price of $1 billion.
This marks a significant step in the two joining hands to grow into a single powerful entity that could possibly take on Flipkart’s biggest rival, the Indian wing of e-commerce major Amazon. However, in spite of the board approval, several obstacles still remain in the way of the merger, including the need for consent of Snapdeal’s shareholders.
Flipkart’s bid is for Snapdeal’s marketplace business as well as its e-commerce solutions unit Unicommerce and, if it does go through, would be the single biggest acquisition to have ever taken place in the Indian e-commerce space. It would also help Snapdeal’s biggest investor, SoftBank Group, secure a stake in Flipkart at an opportune time in the booming Indian e-commerce industry.
One of the major factors credited in the increase in online shopping in the country has been the availability of more cheap phones and affordable data plans. According to a report made by accounting firm EY in 2016, e-commerce had grown at a massive compound annual growth rate of more than 50 per cent within the last five years, and is only expected to grow further. By 2020, e-commerce sales are expected to exceed $35 billion.
In the midst of this, fierce competition from rivals like US giant Amazon and Flipkart had resulted in Snapdeal suffering huge losses. Softbank had already written off a sum of more than $1 billion on the valuation of its investment in Snapdeal, with its valuation plunging from $6.5 billion in February 2016 to $1 billion. Additionally, Indian private sector lender Axis Bank has also been gunning to secure Snapdeal’s mobile wallet unit FreeCharge, for which, it has reportedly bid an amount of $60 million already.