Snapdeal to remain independent, ends merger talks with Flipkart; key highlights in months of negotiations

In what looks like a closure to the ongoing talks with Flipkart, Snapdeal has decided to not merge with India's largest online retailer and instead pursue an "independent path". Flipkart had reportedly offered USD 900-950 million for the acquisition of Snapdeal, but the deal failed to come through. "Snapdeal has been exploring strategic options over the last several months. The company has now decided to pursue an independent path and is terminating all strategic discussions as a result," Snapdeal spokesperson said in an emailed statement to PTI. The statement however did not mention Flipkart. The e-retailer, instead, has a "new and compelling direction -Snapdeal 2.0", it said. The statement said Snapdeal was confident of being self-sustainable, and would even achieve gross profit this month.

"In addition, with the sale of certain non-core assets, Snapdeal is expected to be financially self-sustainable," it added. The latest developments come within days of Snapdeal agreeing to sell its digital payment platform, FreeCharge, to Axis Bank for Rs 385 crore. One of the leading contenders in the Indian e-commerce space, Snapdeal has seen its fortunes falling amid strong competition from Amazon and Flipkart.

Its largest investor, SoftBank had been proactively mediating the talks for the sale. Japanese conglomerate SoftBank said supporting entrepreneurs and their vision is at the heart of Masayoshi Son's (SoftBank Chairman and CEO) and SoftBank's investment philosophy. "...we respect the decision to pursue an independent strategy. We look forward to the results of the Snapdeal 2.0 strategy, and to remaining invested in the vibrant Indian e-commerce space," a SoftBank spokesperson said.

Key highlights in the build up to the merger of Flipkart and Snapdeal

• Snapdeal's board, earlier this month, rejected a takeover offer of USD 800-850 million (around Rs 5,500 crore), which felt the amount undervalued the company. After which, Flipkart increased the offer.
• If the deal had gone through it would have been the biggest acquisition in the Indian e-commerce space. Japan's solar-to-tech conglomerate  SoftBank, which is the largest investor in Snapdeal, had been mediating the negotiations between the two online retailers the past few months.
• Snapdeal founders Kunal Bahl and Rohit Bansal, Nexus Venture Partners and Kalaari Capital were also part of the Snapdeal board which had to decide on the matter. Kalaari Capital and Nexus Venture Partners had not agreed with the valuation given by SoftBank. Compared to a peak valuation of about USD 6.5 billion in February 2016, the talks had valued Snapdeal at about USD 1 billion.
• SoftBank had invested roughly $1 billion into Snapdeal since 2014. But, Snapdeal lost the No.2 spot in Indian e-retail to the US online marketplace giant Amazon. A Flipkart-Snapdeal combination would have given tough competition to Amazon.
• Snapdeal founders Kunal Bahl and Rohit Bansal had even written a letter to its 3,000 employees  to assure them about their future. They said their priority was to ensure the well-being of employees amid the "speculation" surrounding the company.  "We will do all that we can, and more, in working with our investors to ensure there is no disruption in employment and that there are positive professional as well as financial outcomes for the team as the way forward becomes clear," the duo said in the letter.
  

(with inputs from agencies)