E-commerce behemoth Snapdeal may witness a crucial board meeting today. Along with other things, the board will convene to discuss the organization’s sale to rival and market leader Flipkart. The board may also attempt to resolve one of the largest hurdles to the deal — which is getting Nexus Venture Partners to agree to the proposed terms — today.
The Indian e-commerce sector has been witnessing a shifting of the tectonic plates of late. After first allowing e-commerce players to splurge and use investor funds to offer discounts and offers in a bid to scale quickly, investment funds drew their purse strings tight. That along with Amazon’s entry into the market has led to major changes in the landscape.
A Flipkart acquisition of Snapdeal will likely give the combined entity a significant head-start over rival Amazon and such an entity will also wield significant clout among the tech savvy population of the country. However, there are a few hurdles which are keeping the deal from finalizing despite apparent willingness from both the sides.
The Snapdeal board which will be meeting today, will consist of representatives from oftBank, Kalaari Capital and Nexus Venture Partners (NVP), as well as co-founders Kunal Bahl and Rohit Bansal. One of the biggest issues to be resolved will be getting the other stakeholders to agree with the valuation given by Softbank — which is the largest shareholder in Snapdeal.
Initially, both Kalaari and Nexus Ventures were against the valuation put up by Softbank. However, only Nexus is opposing the valuation at this point. If the board can get NVP to acquiesce to the figure and terms they have in mind, a deal with Flipkart could be announced in a matter of weeks. Also, Snapdeal’s mobile wallet service Freecharge may well be spun off and sold separately.
While we do not have any data on the figures, Snapdeal’s valuation will undoubtedly be lower than the $6.5 Billion it was valued at in its last fund-raiser in early 2016. Things have changed significantly since then and the price offered to Flipkart will much reduced. We are keeping a tab on things and will keep you updated if we hear anything fresh. Stay tuned!
