Snapdeal rejects Flipkart acquisition deal; plans to walk alone ahead
Snapdeal decides to end merger talks with Flipkart and receives its blessings from investor SoftBank.
- Snapdeal walks away from merger talks with Flipkart
- Snapdeal now plans to its future as a standalone company
- To sell certain non-core assets
After over six months of negotiation the Flipkart's deal to acquire Snapdeal fell apart after the company walked away from the merger talks with Flipkart. The company now plans to its future as a standalone company and says its will sell certain non-core assets, according to a Reuters report.
The board of Jasper Infotech, which runs Snapdeal, had in-principle agreed to Flipkart`s revised buyout bid of up to $950 million and a deal was pending approval of smaller shareholders, Reuters reported last week.
This was a sudden twist in the merger deal which seemed all but complete as several media reports came out that the board of Snapdeal had approved the new offer of Flipkart to acquire it for around $950 million. Even Snapdeal co-founder Kunal Bahl had sent a letter to employees speaking about a new beginning for employees.
The selling of its non-core assets would mean the sale of some of its other companies under it.
Snapdeal had already sold its digital payments platform Freecharge to Axis Bank last week for Rs 385 crore. And this decision would now mean that it would it would sell its logistics unit Vulcan Express, sources told Reuters.
Snapdeal's investor SoftBank which had been pushing for Snapdeal's sale to Flipkart for so long, on Monday said that it respected Snapdeal's plan to pursue an independent strategy. It further said that it looks forward to the results of Snapdeal's '2.0 strategy'.
A third source said two early stage investors in Snapdeal, Kalaari Capital and Nexus Venture Partners, were also reluctant to back a deal with Flipkart, the report said.
SoftBank's comments on Snapdeal's strategy came in an e-mailed statement, said the report.
Though Snapdeal's founders were not looking to sell the company to Flipkart, SoftBank, which had written of $1 billion of its investment in the company, was pushing for the sale of the company.
The Snapdeal board had rejected Flipkart's first bid of $850 million made in early July. However, the board had accepted Flipkart's revised offer of $900-950 million at the end of July. The acquisition deal was all but over.
Shareholders of Snapdeal were left to approve the deal, the sources told Reuters, declining to be named as the discussions are not public.
(With inputs from Reuters)