Indian e-commerce firm Snapdeal has shot down an initial takeover offer from rival Flipkart.
Flipkart, which leads the Indian e-commerce market, made a “low-ball” offer of $700 million to $750 million after completing due diligence on Snapdeal, which is India’s third-largest e-commerce player. However, despite the rejection, talks are ongoing, with a deal expected by mid-July.
Snapdeal, a unit of Jasper Infotech, has seen its valuation tumble dramatically over the past year from a peak of $6.5 billion in February 2016 to around $1 billion currently. Competition in India’s e-commerce market is cutthroat, meaning that firms are finding it increasingly difficult to secure funding.
The rejected Flipkart offer was for Snapdeal’s marketplace unit and did not cover its payments unit Freecharge or logistics unit Vulcan. Both of these units are being sold separately.
Discussions regarding a potential deal between the companies have been underway since May, when SoftBank negotiated a preliminary takeover deal with Snapdeal’s founders and Nexus, which was an early investor in the e-commerce firm.
In 2014, SoftBank invested $627 million in Snapdeal. The Japanese firm has since ploughed around $2 billion of investment into the Indian startup – one of its largest investments in India.
In March, Snapdeal shot down rumours that it was mulling a sale to local rivals Flipkart and Paytm. Increasing competition in the e-commerce space resulted in Snapdeal ceding its second-placed position to Amazon. This prompted an announcement in late 2016 that it would need to lay off almost half of its 4,300 staff.