Amid already rife speculations that SoftBank Corp. — the largest shareholder in struggling e-commerce brand Snapdeal — is looking to sell the company to either Flipkart or Paytm, a fresh piece of news has surfaced in multiple media reports. And yet again, there’s nothing good about the news.
According to the terms proposed by SoftBank, Snapdeal shareholders will get one share of the country’s largest e-commerce company for every ten they own, reports ETTech based on unnamed sources. However, the same sources of ET suggests that the company’s early investors – Kalaari Capital and Nexus Venture Partners, are asking for about $100 million each from the sale.
While the ETTech report says that the company’s shareholders held a meeting, another report suggests that SoftBank has failed to convince the board of Jasper for the said sale to India’s largest e-commerce portal Flipkart. We’ve mailed Snapdeal for a comment on the same, and will update the story once we hear back from them.
Earlier, it was reported that Snapdeal is looking for a potential merger or sale with Flipkart or Paytm. The company however, “categorically denied” such reports. However, the discussions are moving ahead with Flipkart as the valuation offered by Alibaba-backed Paytm was much lower than what Flipkart offered.
These sales talks however, are in stark contradiction to the recent announcement made by the company to its employees, ensuring profits in the next couple of years. The company is hosting more than necessary town hall meetings over the past few weeks, and in one such meeting, the management dismissed takeover talks and other such reports out in the market.
The board meeting, which was held on Tuesday, signals easing of tensions among Snapdeal’s early investors — Kalaari Capital and Nexus Venture Partners, and it’s largest backer Softbank. Earlier, it was reported that due to the tussle between these investors, SoftBank pulled out its investment offer, twice.
Softbank held the meeting in New Delhi, which was attended by all the major shareholders in the company. SoftBank holds a dominant 33% stake in Snapdeal, while Kalaari Capital and Nexus Venture Partners own about 8% and 10% respectively. The two co-founders together own about 6.5% of the company, which at its peak, was valued at about $6.5 billion.
Kalaari Capital, which has invested about $27.5 million so far in Jasper, the parent company of Snapdeal, earned returns estimated at about $100 million when it sold a portion of its stake to SoftBank in late 2014. Nexus VP on the other hand, has invested close to $50Mn, and is yet to sell any of its stake.
It was said that for the proposed sale to happen, SoftBank could also buy out Tiger Global’s stake worth around $500 million to $1 billion in Flipkart, in order to pick up a 20% stake in India’s largest commerce company for about $1.5 billion.
The deal, if completed, will mark the biggest acquisition in Indian ecommerce, and the startup ecosystem as a whole. The move will also redefine the online retail market where apart from Flipkart, America’s Amazon and China’s Alibaba are the only remaining prime contenders.