India’s third largest e-commerce company Snapdeal turned down an initial takeover offer of $700 million to $750 million from rival Flipkart, Live Mint reported.
Flipkart, the country’s top online marketplace, completed due diligence on Snapdeal and made a “low-ball” offer which was rejected, a source told Live Mint, noting negotiations will continue, with a deal likely by mid-July.
Snapdeal, which is operated by Jasper Infotech, had a peak valuation of $6.5 billion in February 2016, but the figure since plummeted to an estimated $1 billion as competition in what is one of the world’s most fiercely contested e-commerce markets intensified, and funding became harder to line up.
Flipkart’s offer is only for Snapdeal’s marketplace unit and doesn’t include its payments arm Freecharge or its logistics business Vulcan, both of which are being sold separately, Live Mint said.
The e-commerce companies have been negotiating a final deal since early May, when SoftBank brokered a preliminary takeover agreement with Snapdeal’s founders and early investor Nexus.
Snapdeal in 2014 received an investment of $627 million from SoftBank, which went on to invest nearly $2 billion in the Indian e-commerce startup, making it one of the Japanese company’s largest investments in India.
In late March Snapdeal denied reports it was discussing a potential sale to domestic rivals Flipkart and Paytm. Snapdeal is facing increased competition, and in late 2016 announced plans to cut nearly half its workforce of 4,300 people after losing the number two spot in India’s e-commerce market to Amazon.