Flipkart has reportedly offered to pay $650-700 million in stock immediately and another $150 million at a later date.

Flipkart makes a revised buyout offer of 850 million for rival Snapdeal
Atom M&A Tuesday, July 18, 2017 - 13:36

After Snapdeal rejected Flipkart’s buyout of $700-750 million, Flipkart has now sent a revised offer to the beleaguered ecommerce major of roughly $850 million.

According to a report in the Mint, Flipkart has offered to pay $650-700 million in stock immediately and another $150 million at a later date, the people said.

Snapdeal’s board is said to have met on Monday night to consider the offer, sources told Mint.

Last week, Mint reported that Snapdeal had asked Flipkart to pay at least $900 million to buy the company.

If Snapdeal accepts Flipkart’s latest offer, the companies will then negotiate a sale and purchase agreement (SPA), a contract that will bind the two companies to conclude the deal.

A shareholder meeting will then be called by Snapdeal to get the deal approved by all of them.

Snapdeal has over 25 institutional shareholders as well as dozens of individual part-owners.

However, given that smaller investors like PremjiInvest have objected to the deal, the final closure could still be challenging and may take months.

The sale to Flipkart only includes Snapdeal’s ecommerce platform and not its payments arm Freecharge and logistics arm Vulcan Express.

Snapdeal is separately in talks with various digital payments players and banks to sell its payments arm Freecharge and is talking to logistics players to sell its logistics unit Vulcan Express.

Mint reports that Snapdeal may still include Vulcan as part of the Flipkart deal if it is unable to finalize a separate sale of the unit, they said.

Snapdeal, which at one point hit a peak valuation of $6.5 billion in 2016, struggled to stay afloat amidst fierce competition from rivals such as Flipkart and Amazon.

As things got worse, thousands of jobs were cut thousands of jobs and a number of senior and middle managers resigned.

Its largest investor SoftBank Group also suffered a loss of nearly a billion dollars on its investment in Snapdeal. Since March, it started talking to other ecommerce majors to sell the company despite Kunal Bahl and Rohit Bansal’s initial resistance.

It is no surprise then that Snapdeal’s sale will benefit Softbank more than anyone else. Mint reports that the deal is an attempt at financial engineering by Tiger Global and SoftBank, which have seen their bets falter to differing degrees since the start of 2016.

There have also been reports on Monday that Snapdeal’s sale to Flipkart may also see an equity infusion into Flipkart by SoftBank of around $2 billion. It is also in talks to buy part of Tiger’s 30-33% stake in Flipkart.