Snapdeal co-founders are said to resist Flipkart takeover offer
Snapdeal’s co-founders are resisting the latest acquisition bid from rival Flipkart Online Services Pvt. and the company’s board plans to let all shareholders vote on the offer to reach a final resolution, according to people familiar with the matter.
The simmering differences between co-founders, Kunal Bahl and Rohit Bansal, and other board members surfaced during conference calls in recent days to discuss the Flipkart offer of about $950 million, said the people, asking not to be named because the matter is private. Unable to reach a unanimous decision, the six-member board wants to appeal to the broader group of about 30 investors in Jasper Infotech Pvt, which owns the Snapdeal brand, to let them determine the company’s fate, the people said.
Snapdeal and Flipkart have a history of animosity born from years of competing as the two largest local players in India’s expanding e-commerce market. SoftBank Group Corp., which has nearly a third of Snapdeal shares, and Tiger Global Management, which holds a substantial stake in Flipkart, have been pushing the two competitors to merge so they can create a stronger local company to find off Amazon.com Inc.
SoftBank has two board seats at Snapdeal, along with the two co-founders. Early investor Nexus Venture Partners and an independent member Akhil Gupta round off the six. Snapdeal did not respond to a request for comment, while SoftBank declined to comment.
The co-founders have urged the other four board members to consider alternatives to the Flipkart offer. Among them are a possible merger between Snapdeal and Infibeam Inc., a publicly listed e-commerce provider, and a push to remain independent by raising cash through the sale of smaller units such as the digital wallet service FreeCharge.
The board will start reaching out to Snapdeal shareholders in the coming days to seek a decision on the merger, the people said. Most of these shareholders are likely to convey their consent, making it very likely that the Flipkart offer will be accepted, they said. Flipkart had asked that every one of the smaller shareholders agree to the deal, but that is not likely to happen and the deal will probably still proceed, they said.
Last year, the founders of the two rivals sparred openly on Twitter. Sachin Bansal of Flipkart sniped at Snapdeal, whose investors include Chinese e-commerce giant Alibaba Group Holding Ltd.
“Alibaba deciding to start operations directly shows how badly their India investments have done so far,” wrote Bansal, who is not related to the Snapdeal founder.
Snapdeal’s Bahl was quick to respond in a tweet, referencing a move by a Morgan Stanley fund to mark down the value of its stake in Flipkart.
“Didn’t Morgan Stanley just flush $5 billion worth market cap in Flipkart down the…” accompanied by an emoticon for a toilet. “Focus on ur business, not commentary,” he tweeted.