Infibeam denies bidding for Snapdeal

NEW DELHI & AHMEDABAD: Infibeam Incorporation Ltd, India's first listed online retailer, has denied that it has made a potential bid to acquire embattled online marketplace Snapdeal. Earlier today reports emerged of the Ahmedabad-based company being the latest to join the fray to acquire the Delhi-based online retailer which is backed by Japan's Softbank.

The all-stock bid, according to two people aware of developments, was estimated to be about $1 billion (Rs 6,652.75 crore), making it higher than the revised offer for Snapdeal that rival Flipkart is expected to make in the coming week.

Infibeam founder and MD Vishal Mehta denied any offer in a telephone conversation with ET. "No, we haven't made any offer to Snapdeal," he said.
Infibeam and Snapdeal did not reply to email queries on the development.

Also Read: Snapdeal may merge with Infibeam to create $2bn company

Last week, the Snapdeal board had rejected an initial offer by Flipkart--estimated at about $800 million-- deeming it to be significantly undervaluing the online marketplace, which at its peak was valued at $6.5 billion.

An offer from the BSE-listed Infibeam --expected to be an all-stock transaction--has the potential to give liquidity to all the stockholders of Snapdeal, a list that includes venture capital firms Kalaari Capital and Nexus Venture Partners, and Chinese ecommerce behemoth Alibaba Group, according to sources aware of the negotiations.

Flipkart, the country's largest online retailer, has been the frontrunner to acquire its smaller rival, having completed its legal and commercial due diligence of the latter earlier this month.

However, the transaction, which was being orchestrated by Tokyo-headquartered SoftBank, the largest stakeholder in Snapdeal, has been beset with difficulties, with Kalaari Capital and Nexus Venture Partners, two early backers of the company with powerful veto rights, seeking a special payouts before giving their assent to the transaction.

Separately, a group of minority stakeholders, including, PremjiInvest, the personal investment arm of Wipro Chairman Azim Premji, BlackRock, the world's largest asset manager, and Temasek, the government of Singapore-owned investment firm, have demanded greater clarity on the sale proceedings, along with protection of rights of the minority shareholders.

According to the sources cited above, the Snapdeal board is expected to take a call only after the formal bids by both, Flipkart and Infibeam come in.
It is yet unclear though, if the special payout to Kalaari Capital and Nexus Venture will still be paid out, if the board does agree to the latest bid from Infibeam. Additionally, a potential acquisition by Infibeam could also free up SoftBank to close its investment in Flipkart, estimated at $1.5-$2 billion, sooner than anticipated.

Ahmedabad-based Infibeam, the parent of horizontal e-commerce platform Infibeam and e-commerce enabler BuildaBazaar, made its pubic market debut in March last year, making it the first, and till date, the only pure play ecommerce firm to be publicly listed in India.

The company, which has a market cap of Rs 6,105.77 crore, and P/E ratio of Rs 138.36, was founded in 2007 by former Amazon executive Vishal Mehta. The promoter and promoter group continue to hold 44.5% stake in the company.

Shares of Infibeam closed up 1.99% at Rs 1,126.10 at the end of trade on NSE on Thursday.