Snapdeal founders derail $950 million acquisition bid by Flipkart as talks end (update)

(Reuters) — India’s Snapdeal said it had decided to remain independent and was ending all talks regarding a sale, bringing the curtain down on months of discussions around a possible acquisition of the e-commerce firm by bigger rival Flipkart.

The board of Jasper Infotech, which runs Snapdeal, had in-principle agreed to Flipkart’s revised buyout bid of up to $950 million and a deal was pending approval of smaller shareholders, Reuters reported last week. But obstacles remained with sources saying founders Kunal Bahl and Rohit Bansal were mulling an alternate path.

“The company has now decided to pursue an independent path and is terminating all strategic discussions as a result,” Snapdeal said in a statement on Monday.

The failure to forge a deal is a setback for Softbank Group, the largest investor in Snapdeal, as the Japanese firm has been trying to engineer an all-stock transaction for months, as a means to secure a sizeable stake in Flipkart, India’s No. 1 home-grown e-commerce player.

The Flipkart deal had a “number of onerous requirements” such as “indemnities and protections”, a source involved in the talks told Reuters ahead of Snapdeal’s decision on Monday.

Flipkart also insisted on getting approval from all Snapdeal shareholders for the deal to go through, two other sources said.

Founders Bahl and Bansal plan to run a stripped-down version of its online marketplace and this has the backing of the firm’s early investors Kalaari Capital and Nexus Venture Partners, a fourth source said.

Snapdeal will be able to financially sustain itself with the sale of certain non-core assets, the firm said in its statement.

The company has already announced one such sale – Indian lender Axis Bank said last week it would acquire the company’s digital payments unit FreeCharge for $60 million.

Standard Chartered’s private equity arm is in talks to acquire Snapdeal’s logistics arm Vulcan Express, a fifth source told Reuters.

Reuters has previously reported that the founders’ bid to keep Snapdeal independent is likely to result in layoffs at the company, which currently employs about 1,200 people.

SoftBank said it respects Snapdeal’s 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,” SoftBank said in a brief statement.