The acquisition of struggling e-retailer Snapdeal’s mobile wallet FreeCharge by Paytm, India’s largest wallet company, seems to have been called off, according to  two sources in the know.

The deal was pegged at $40 million to $50 million, and was on till about a couple of week ago, a third source had told FactorDaily then.

The main reason for the fallout is valuation, one of the two sources mentioned above said.

Jasper Infotech, owner of Snapdeal and FreeCharge, was expecting the wallet business to be valued at anything between $70 million and $90 million. “What Paytm was offering was less than $50 million… There was no exclusivity agreement with Paytm,” the second source said.

SoftBank, the largest investor of the beleaguered ecommerce conglomerate, wants to sell off Snapdeal’s non-core assets like FreeCharge and logistics arm Vulcan Express, alongside holding talks with Flipkart for an acquisition of the e-retailer itself. The proceeds from the sale of the two will give relief to Snapdeal, which is struggling for cash to run its already stripped-down operations.

However, FreeCharge still has steam left in it to find some new suitors. According to reports, Airtel is in the fray, along with banks like Axis Bank and Bank of Baroda, among others. A financial daily reported that Axis Bank is doing a due diligence for a $100 million acquisition.

Axis Bank did not comment on the deal. Airtel and Paytm, too, declined to offer comments.

“In some of the initial talks with few banks and telecom companies, the deal is valued north of $50 million,” said the source.

The second source said it makes more sense for a telecom operator or a bank to acquire FreeCharge. “Banks and telecom companies are trying to build a digital payment ecosystem, and FreeCharge already has some traction, though it is quite low from its peak a year ago,” this source said.

The latest numbers for FreeCharge are not available but, in December, it was estimated to have over 40 million customers. That number has fallen since. Paytm has over 200 million customers.

A fourth source said that Airtel may not buy FreeCharge as it already has it focus set on payments bank and also has Airtel Money, which is a FreeCharge competitor.

MobiKwik, which is the country’s second largest mobile wallet company, was one of the first suitors for FreeCharge. MobiKwik, too, walked away from the deal as it thought that FreeCharge was overvalued.

FactorDaily had reported earlier that SoftBank was delaying Paytm’s deal with Freecharge as it feared that Snapdeal would get the money to hold fort for a little longer.

Snapdeal’s deal with Flipkart is also in jeopardy over valuation. Snapdeal’s board had rejected Flipkart’s offer of $800 million for the acquisition, as the earlier agreed upon deal was for $1 billion. Flipkart might revisit its offer.

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