Indian online retailer Flipkart boosts Snapdeal’s chances by raising offer: sources

By Sankalp Phartiyal MUMBAI (Reuters) – Indian e-commerce firm Flipkart’s improved takeover offer for Snapdeal of up to $950 million has raised the chances of a deal between the two rivals, although some sticking points are still being discussed, two sources familiar with the matter said. Leading local online retailer Flipkart has revised its offer for SoftBank-backed Snapdeal to between $900 million and $950 million, the sources said, adding that the new proposal is being evaluated by Snapdeal’s board. Reuters had earlier reported that Snapdeal had rejected Flipkart’s initial offer of $800 million to $850 million earlier this month because its board was not satisfied with the offer and payment terms. Flipkart’s revised offer has been made for Snapdeal’s marketplace and its e-commerce solutions provider Unicommerce, but does not include its logistics arm Vulcan Express and digital payments unit FreeCharge, which could be sold separately, said the sources, who did not want to be named because the discussions are not public. One of the sources said Flipkart may withhold $150 million of the deal price for 12-24 months after the deal closes. Both sources said negotiations are continuing to address concerns of Flipkart and Snapdeal shareholders. Japan’s SoftBank <9984.T> is Snapdeal’s largest shareholder. Flipkart plans to acquire Snapdeal employees but has not given any assurances on employee retention levels, one of the sources said, noting that this has been a sticking point in the talks. Snapdeal currently employs around 1,500 people. Snapdeal’s board is also considering a proposal from listed e-commerce player Infibeam to acquire the company, the sources said, adding that the chances of a merger with Infibeam are slim. Details of Infibeam’s offer were not immediately available. Snapdeal is expected to decide on both offers in the next 10 days, one of the sources said. SoftBank is keen for Snapdeal to be absorbed by Flipkart and wants to financially support the largest domestic e-commerce vendor, which is battling Amazon.com for a bigger share in India’s growing online retail market. “Flipkart’s revised offer should clinch the Snapdeal deal in a few weeks,” said Satish Meena, senior analyst at research firm Forrester. “There is nothing for SoftBank if Snapdeal goes and does a deal with Infibeam.” Shares of Infibeam were trading 3.6 percent higher on Tuesday afternoon. Flipkart, Snapdeal and some of its major backers were not immediately available for comment. SoftBank and Infibeam declined to comment. India’s third-largest private lender Axis Bank, leading digital payments company Paytm and a few others are in talks to buy FreeCharge, which is likely to be sold for between $70 million and $80 million, one of the sources said. Axis Bank did not respond to requests for comment, while Paytm declined to comment. (Reporting by Sankalp Phartiyal; Editing by Euan Rocha and Muralikumar Anantharaman)