Snapdeal Sale to Flipkart May be Called Off


The recommended Snaldeal sale to Flipkart has been put delayed and might be canceled as the founders and investors of the battling online marketplace have not yet conceded to the terms of the agreement, three people common with the issue said. Snapdeal and Flipkart, on the other hand, didn’t react to emails looking for the comment on the matter. A SoftBank Group Corp. spokeswoman said that it was untimely to remark on the Snapdeal sale and SoftBank’s investment I Flipkart. The spokeswoman said, “There will be a decision by tonight.”

According to Mint, a declaration on the same could be done as early as on Monday morning. Throughout the end of the week, Snapdeal (run by Jasper Infotech Pvt. Ltd) and Flipkart Ltd scratched off a key meeting that had been planned for Monday to proceed with the negotiations over the deal, the people said. Independently, SoftBank, Snapdeal’s biggest speculator, was in talks to purchase shares worth $1.5 billion in Flipkart, the people said. The SoftBank had intended to put $500-700 million in Flipkart and purchase shares worth generally $1 billion from its biggest investor, Tiger Global Management, the people added. It is still not clear if this deal is still on, two of the three individuals said.

Prior to the most recent development, the SoftBank investment was to take place alongside the Snapdeal sale. On the other hand, the third person said that SoftBank will keep on doing its discussions to put in Flipkart regardless of the possibility that the Snapdeal deal doesn’t go through.  The other day, it seemed like an on-again-off-again Flipkart-Snapdeal merger would finally be completed. On 26 July, the board of online marketplace Snapdeal offered the go-ahead to the business to continue discussions to market itself to Flipkart, which had jumped its buyout offer to $850 million two weeks ago. The truth is that there are three noteworthy issues holding up the deal. First, Snapdeal co-founders Kunal Bahl (CEO) and Rohit Bansal (chief operating officer) were not in favor of giving it to their sworn foe Flipkart from the beginning and they would still prefer to keep Snapdeal autonomous, the three individuals added.

On the other hand, Bahl and Bansal had additionally communicated reservations about the “indemnity clause” in the proposed agreement, the people said this. According to the clause, the founders of Snapdeal and its board will be considered responsible for the portrayals they have made to Flipkart about the company’s financial statements, business structure, and other matters, they added. They also said that the Snapdeal founders want this condition to be diluted. The people said that their endeavors to keep the firm autonomous were helped by the offer of its payments unit FreeCharge to Axis Bank Ltd a week ago for Rs385 crore in cash.

Secondly, some of Snapdeal’s minority shareholders are not in favor of the suggested payouts to the Nexus Venture, Kalaari Capital, and the Snapdeal co-founders, the three individuals said. Following SoftBank, Nexus and Kalaari are the biggest investors in Snapdeal, which has more than 25 institutional investors, and they were supposed to get higher payouts in respect to different investors as a major aspect of the agreement, the people added.

And thirdly, SoftBank needs Flipkart to transform the structure of the agreement. As per the current structure, the agreement would force assess liabilities on SoftBank, which it finds inadmissible, one of the people among three said. Softbank has requested for a new agreement structure, this individual said. Mint couldn’t find out what precisely these commitments are. Credit Suisse and J. Sagar Associates are the investment banking and legal guides to Snapdeal, separately. Goldman Sachs and Khaitan and Co. are signifying for Flipkart.


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