In the latest development around the potential acquisition of Snapdeal by Flipkart, Snapdeal’s major shareholder — Japanese investor SoftBank has bought out Kalaari Capital’s stake in the company. Additionally, it has also completed the buyout of the founders’ Kunal Bahl and Rohit Bansal’s shares as well.
As per the reports, post this transaction, SoftBank will own around 47.5% share in the e-commerce marketplace. This development comes shortly after Kalaari Capital’s representative, Vani Kola, resigned from the company’s board. Thus, Kalaari Capital does not have any representative on Snapdeal’s Board.
The deal, which has been in the works for last few months, was stuck due to disagreement among stakeholders over final settlement for the company’s earliest investors — Kalaari Capital and Nexus Venture Partners. Since SoftBank proposed the sale of e-commerce platform to rival Flipkart in April this year, it faced opposition from the said VC firms as they asked for $100 million each from the proposed sale. But, they’ve eventually come around.
The e-commerce companies have reportedly signed a non-binding term sheet for the merger. Flipkart and Snapdeal are expected to complete the merger in around three months’ time. Earlier, Flipkart had made an informal offer for the acquisition of Snapdeal at $1 billion.
However, earlier today we reported that Flipkart has signed a binding term sheet, making a commitment to its intent of purchasing rival Snapdeal. The company will now undertake the commercial and financial diligences within the next few days. And as expected, the term sheet values Snapdeal at somewhere around $1 billion.
The price is, however, not final as of yet. Flipkart will now go over Snapdeal’s transactions and once it has done so, a final price will be arrived at. But, the final price is like to hover in the neighborhood of $1 billion, something which I’ve been repeating for quite a long time.
The merger is expected to take place through a share swap deal. As per the reports, SoftBank is likely to get upto two board seats in merged entity. Flipkart will retain ‘Snapdeal’ brand for the interim and the merged entity will fall under the ‘Flipkart’ brand.