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Flipkart-Snapdeal saga flares up again – Snapdeal seeking $900M

Snapdeal is reportedly asking for $900 million as the acquisition cost if Flipkart wants to take it over.

Earlier Flipkart had disrupted the unicorn status of Snapdeal by making an offer of $400 million. Snapdeal rejected the offer and told Flipkart that its money making firms in logistics are not up for sale either.

It is reported that Flipkart has not yet responded to the offer made by Snapdeal. However, it is likely that Flipkart will offer a new price within two weeks not going below the threshold set by Snapdeal.

Last month Flipkart had offered around $700-$750 million for the buyout. However, this too was rejected as it was way too low for a firm which still holds the status of a unicorn thanks to its super-wealthy investors.

Flipkart and Snapdeal have already signed the Letter of Intent (LoI) for the merger in May 2017. Moreover, Softbank bought the shares of Kalaari Capital and both of the founders as well. This increased the total shareholding of Softbank to up to 47.5% in Snapdeal. The investors also infused further 113 crores into the troubled e-commerce firm to keep it afloat.

In the month of June, PremjiInvest, the investment division of the Wipro had sent a letter concerning the minority investors of Snapdeal. Moreover, Azim Premji had his own reservations about the deal between the two homegrown e-commerce firms. Ratan Tata is also one of the minority stakeholders in Snapdeal. Almost all of the minority stakeholders have questioned the viability of the deal and this is leading to the delay in the process.

Almost 40% of the Snapdeal is under control by several leading players in the industry. Some of them are Alibaba, Ontario Teachers’ Pension Plan, Foxconn, and as well as a Hedge Fund from Hong Kong. However, these minority investors do not hold the Board position.

SoftBank holds the majority shares of 33% in Snapdeal and hence plays the major role as a decision maker. This startup investment giant is looking for buying a part of the Tiger Global’s share in Flipkart as well.

Another interesting aspect is that the offer price asked by Snapdeal of $900 million is for the e-commerce division only. The rest of the verticals might go up for sale individually as a separate unit.

The picture of the Flipkart-Snapdeal saga will be clear within next two week. It has been going on for quite some time now and hopefully, it will see some results soon.

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