“It is likely that the previous offer was sent in a hurry to meet the timeline. You always know that there’s going to be a push back, so you keep a margin aside,” revealed the undisclosed source.
Would Snapdeal accept it?
The new offer is not the $1 billion that Snapdeal was expecting but it is quite close to it. Therefore, it won’t surprise many if the Kunal Bahl-led company accepts the offer. Especially, with Japanese MNC Softbank spearheading the deal, which is eager to seal the deal with Flipkart.
If the merger deal does materialize, then the Indian ecommerce industry’s map would definitely change. The once rivals would become partners with one common goal – defeating Amazon. Flipkart doesn’t want to lose its leadership position to Amazon and Snapdeal might want to settle scores since the American etailer replaced it on the leadership board. What’s the saying – my enemy’s enemy is my friend – right?
In addition, Snapdeal needs the money to survive as their funds are drying up.
So in an ideal world Snapdeal is most likely to accept the offer. But this isn’t an ideal world, is it?
Infibeam could possibly snatch Snapdeal from Flipkart’s hands?
Industry watchers believe that a merger with Infibeam would be far more beneficial than merging with Flipkart because of the different business models.
Flipkart and Snapdeal follow the same business model, i.e. business-to-customer (B2C) ecommerce. On the other hand, Infibeam’s dominant business area is its business-to-business (B2B) ecommerce platform. Therefore, a merger between B2B and B2C players would open up new opportunities for both the players.
That’s why Snapdeal’s board is seriously considering Infibeam’s offer, in spite of Softbank’s pressure to accept Flipkart’s offer.
“But SoftBank cannot force a decision on the Snapdeal board as it does not have 75% voting rights,” said an insider.
The sources also disclosed that Infibeam’s bid might have compelled Flipkart to come close to $1 billion.
What Snapdeal and Infibeam stand to gain?
- According to sources, Snapdeal board is going to pitch for a 50:50 merger, which sounds better than getting completely absorbed into Flipkart
- Snapdeal would get a chance to revive its B2C business with Infibeam’s help and cross sell on the B2B platform
- Infibeam’s recently acquired firms like DRC Systems and CC Avenues would benefit Snapdeal & its sellers and vice versa
- Infibeam would profit from Snapdeal’s brand value; it is after all one of the key home-grown ecommerce players
- The shareholders of Infibeam would gain from this merger as their stake value would increase
There are clear pros and cons of merging with Flipkart or Infibeam. The ball is in Snapdeal’s court. Any guesses which one would they pick?