Flipkart set to sweeten offer for Snapdeal; may go up to $950 mn

Flipkart is likely to make a revised offer of around $900-950 million for buying out its rival Snapdeal, according to unconfirmed reports today. The two companies refused to comment on the matter

The new offer almost matches the initial asking price of $1 billion for acquisition of the beleaguered e-commerce marketplace.

A new offer of $900-950 million is likely to be made by early next week, according to a source cited by PTI.

Snapdeal's board had earlier rejected an offer of $800-850 million (around Rs5,500 crore) from Flipkart as it felt the amount undervalued the company given that the due diligence report was clean. (See: Snapdeal rejects Flipkart's Rs5,500 cr buyout offer; talks still on)

SoftBank, Snapdeal's largest investor, has been proactively mediating the sale for the past few months. The board of Snapdeal also has representation from its founders Kunal Bahl and Rohit Bansal, Nexus Venture Partners and Kalaari Capital.

Snapdeal is also engaged in separate discussions for selling Freecharge (mobile wallet operations) and Vulcan Express (logistics). These deals are also likely to be closed over the next few weeks, according to PTI.

The deal between Snapdeal and Flipkart, if completed, would mark the biggest acquisition in the Indian ecommerce space.

One of the leading contenders in the Indian e-tailing segment, Snapdeal has seen its fortunes failing amid strong competition from Amazon and Flipkart.

Snapdeal's valuations have also plummeted from about $6.5 billion in February 2016. SoftBank has already written off over $1 billion on valuation of its investment in Snapdeal.

The deal being orchestrated by SoftBank has been in the making since the start of the year but has faced many impediments including a shareholder disagreement.

Another point of contention has been the insertion of a non-compete clause for the Snapdeal co-founders Kunal Bahl and Rohit Bansal, which is still to be agreed upon, according to The Times of India. Such a clause help restrict the Snapdeal founders from starting a business in ecommerce for a certain period of time.

"The final offer may still not touch the billion-dollar mark but is likely to be presented in another week. Flipkart has prepared a revised offer but that still has multiple complexities," TOI cited a person aware of the development as saying.

In May, both the companies had signed a binding agreement after which Flipkart initiated due diligence. At that time, Snapdeal was being valued at about $1 billion. The exclusivity period of that agreement ended on 2 July.