Dive Brief:

• Indian mobile commerce giant Flipkart has reportedly been closing in on a deal to buy rival Snapdeal, but now the latter has rejected an initial buyout bid from Flipkart, sources close to the matter told Reuters.

• The rejected bid was between $850 million and $900 million, the sources said, which is well below a widely reported estimated value of $1 billion.

• Despite the lowball bid, acquisition discussions between to two companies continue to proceed, with some sources suggesting to Reuters that the rejection of the initial bid was just a matter of course, and not a real threat to the deal.

Dive Insight:

There are at least two parties that would really like to see the collapsed deal move forward: Softbank and Flipkart. 

The former, Japanese mobile technology conglomerate (which also happens to own a minority stake in China’s e-commerce leader Alibaba, as well as 80% of U.S. mobile carrier Sprint), is Snapdeal’s biggest investor. A full sale of that company to Flipkart would allow Softbank to buy a sizable equity stake in the combined company, essentially allowing Softbank to flip its ownership in the No. 3 e-commerce/mobile commerce player in India into a stake on the No. 1 player in that market.

This arrangement requires some nifty financial maneuvering we may be at a loss to explain, but you don’t need to have a finance degree to understand that Softbank could end up with considerable investments in the No. 1 e-commerce companies into both of the two fastest-growing e-commerce markets in the world.

Despite this reported rejection, Softbank probably isn’t sweating it much. The Reuters report suggests the rejection was a negotiating tactic, and perhaps an appropriate response to Flipkart delivering a bid for Snapdeal that was below its own reported valuation of the company.

That brings us to the second party eager to see the deal happen — Flipkart. It may not be fooling anyone with an initial low bid, as many people are aware that despite its No. 1 ranking in India’s e-commerce market, Flipkart is under mounting competitive pressure from Amazon, which recently has made headway in India at Flipkart’s expense. With that in mind, it's likely that Flipkart will do what it needs to do to get this deal done sooner rather than later.

Although, the other wrinkle in all this is that Flipkart’s exclusive negotiating period with Snapdeal has already ended. Could another retailer or e-commerce giant from somewhere else around the world swoop in and make things interesting, while perhaps making both Softbank and Flipkart sweat a little? What about Walmart, which not so long ago was rumored to be mulling an investment in Flipkart? While this initial deal may have fizzled out, mergers and acquisitions are just heating up in India.