Snapdeal-Flipkart merger talks end

01 Aug '17

2 min read

Gurgaon-based Indian e-commerce firm Snapdeal has terminated talks for merger with Bangalore-headquartered Flipkart and is aggressively pushing for continuing operations independently after its investors, which include SoftBank of Japan and firms owned by Ratan Tata and Azim Premji, could not agree on the terms of the deal, according to media reports.

Depleting cash reserves had dragged Snapdeal, whose stakeholders include Foxonn, Tencent, Blackrock and Ontario Teacher's Pension Fund, to a vulnerable position in the last few months.

After Snapdeal, owned by Jasper Infotech Pvt. Ltd., recently sold Freecharge, a mobile payments company it had acquired in 2015, for $60 million to Axis Bank, there was speculation that the move would finally pave way for a deal between Snapdeal and Flipkart.

Snapdeal’s largest investor, SoftBank, had been proactively mediating in the acquisition talks for the past few months. But the term sheet issued by Flipkart detailing buyout conditions was filled with clauses and held back imposing legal liability on Snapdeal board members post the deal, media reports said. Snapdeal representatives, however, did not name Flipkart in any of their statements.

The company is also negotiating with potential buyers for its logistics arm, Vulcan Express. Proceeds from the sale of Freecharge and Vulcan, if it fructifies, could buy Snapdeal some months to continue independently.

Though Snapdeal founders Kunal Bahl and Rohit Bansal are optimistic about the idea of going independent, not many analysts share their optimism after a news agency reported that the company is laying off 80 per cent of its staff. (DS)

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