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2-min read

Snapdeal-Flipkart Merger: Approval Said to Have Been Given by Nexus to SoftBank

Companies like Flipkart and Snapdeal could face more heat in the coming days.


Updated:May 11, 2017, 6:09 PM IST
Snapdeal-Flipkart Merger: Approval Said to Have Been Given by Nexus to SoftBank
Companies like Flipkart and Snapdeal could face more heat in the coming days. (Representative Image: REUTERS/Abhishek Chinnappa/Files)
Japan's SoftBank has secured the crucial nod from co-investor Nexus Venture Partners (NVP) for sale of Snapdeal to India's largest e-commerce firm, Flipkart, sources said.

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SoftBank - the largest shareholder in Snapdeal - had secured a go-ahead from the founders and Kalaari last month.

Read more: Flipkart Big 10 Sale: E-commerce Site Expects Five-Fold Increase in Transactions

However, NVP was not in agreement over the valuation suggested by the Japanese firm and hectic parleys were held in the last few weeks to resolve the impasse.

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According to people familiar with the matter, SoftBank Group has now reached an agreement with NVP to move ahead with the sale plan.

Read more: Sachin Tendulkar's First Ever Selfie Interview: Talks About Make In India Tech

They said the term sheet with Flipkart could be signed within this week and the due diligence for the deal would commence immediately thereafter.

Sources said Snapdeal founders would get about $25 million (roughly Rs. 160 crores) each, while NVP could get close to $100 million (roughly Rs. 643 crores) and stake in the merged/new entity. Kalaari could get about $70-80 million.

Emails sent to Snapdeal, SoftBank, NVP and Kalaari did not elicit any response.

Snapdeal was valued at $6.5 billion in its last funding round in February 2016. The valuation, however, has shrunk since then and the potential deal could see Snapdeal being valued at about $1 billion, said market watchers.

SoftBank yesterday said it suffered a loss of $1 billion (Rs 6,500 crore) on its investment in Snapdeal during 2016-17, almost matching the money it put in the home-grown marketplace.

As per regulatory filings, SoftBank currently owns over 30 percent in Snapdeal, while Nexus has roughly a 10 percent stake and Kalaari holds 8 percent share in the firm.

The deal between Snapdeal and Flipkart, if completed, would mark the biggest acquisition in the Indian e-commerce space and change the landscape of the sector that is witnessing intense competition among players.

Indian e-commerce companies have seen funding dry up over the last few months as investors are focusing extensively on profitability and rationalisation of expenses.

With intense competition from deep-pocketed global rivals like Amazon, companies like Flipkart and Snapdeal could face more heat in the coming days.

There have been reports that Snapdeal's mobile wallet service FreeCharge could be sold separately with players like Paytm and MobiKwik being in the fray.
(Get detailed and live results of each and every seat in the Lok Sabha elections and state Assembly elections in Andhra Pradesh, Odisha, Arunachal Pradesh and Sikkim to know which candidate/party is leading or trailing and to know who has won and who has lost and by what margin. Our one-of-its-kind Election Analytics Centre lets you don a psephologist’s hat and turn into an election expert. Know interesting facts and trivia about the elections and see our informative graphics. Elections = News18)
| Edited by: Krishna Sinha Chaudhury
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