The board members of online marketplace Snapdeal have rejected the offer of $800 million made by Tiger Global-backed domestic online retail giant Flipkart, but sources said talks are still on.

The Snapdeal board, which pegged the valuation of the company at a billion dollars, is unhappy with the quote given by Flipkart, informed sources.

Bengaluru-headquartered Flipkart placed its deal offer for the merger on Monday, which was rejected outright by the Snapdeal board.

“The board is unhappy with Flipkart pegging the valuation nearly $200 million less, even though Snapdeal cleared the due diligence. The board is, however, hopeful Flipkart would reconsider the offer,” said a source.

The due diligence conducted by international consultancy firm EY last week had the Gurgaon-based Snapdeal in the all-clear. Also, the exclusivity clause with Flipkart had terminated on July 2, and officially the SoftBank board — spearheading the talks for merger — has not extended the time. However, sources said SoftBank is hopeful, and the timeline for the deal closure might get an extension.

“The exclusivity clause has ended. The SoftBank board is still hopeful. Given it is the biggest merger in the history of e-commerce in India, the timeline for the deal could get extended. Should that not happen, it will be open season,” the source added.

Sources also said Snapdeal could execute Plan B it’s reportedly ready with. The company might further lighten its operations and manpower, and become profitable - at least on paper.

“The board might look at other buyers or finally give the go-ahead to Snapdeal’s plan. The company might sell its sister concerns such as the logistics arm Vulcan Express and FreeCharge, run some of the operations and work towards an exit. It all depends on Flipkart’s next move,” sources said.
SoftBank, Snapdeal’s largest investor, has been proactively mediating the sale for the past few months. The board also has representation from Snapdeal founders Kunal Bahl and Rohit Bansal, Nexus Venture Partners and Kalaari Capital.

Flipkart would get more than a billion dollars and Japanese telecom major SoftBank as backer, once it completes the merger with Snapdeal. The SoftBank board is also trying to bring everyone on board apropos the sale. Recently, investment bank Credit Suisse, which is advising Snapdeal on the proposed deal, reached out to smaller shareholders to get them aboard.


The firm has a number of investors, including PremjiInvest, Ontario Teachers’ Pension Plan, Ratan Tata, Foxconn, Temasek and BlackRock, among others.

Many of the minority shareholders, including PremjiInvest - the personal investment arm of Wipro Chairman Azim Premji - have written to the company on more than one occasion seeking greater clarity on the terms of the deal. Unhappy with the way they have been dealt with, many minority shareholders have called for equal payouts from the deal.

A lot of kinks are being ironed out around the Snapdeal-Flipkart merger. Three separate rounds of talks are happening for the other firms under Jasper Infotech brand - Snapdeal’s parent firm.