Kunal Bahl and Rohit Bansal—founders of beleaguered e-commerce firm Snapdeal which is expected to be merged with rival Flipkart—have hired law firm Cyril Amarchand Mangaldas to advise them on the merger transaction, a person with the direct knowledge of the development told VCCircle.
The law firm, one of the largest and most renowned in the country, has been hired by Bahl and Bansal in their personal capacity and has been given a specific mandate to negotiate a deal for Snapdeal employees before the proposed merger with Flipkart, said another person privy to the development.
"Currently, a merger (of Flipkart and Snapdeal) is being negotiated. So the founders have appointed the law firm from their own pocket to negotiate and close a deal for employees. The deal will ensure that the employees are not shortchanged," said this person.
The mandate to the law firm includes safeguarding employees' ESOPs, structuring and negotiation, among other things, the first person said.
Cyril Shroff, managing partner of Cyril Amarchand Mangaldas, confirmed the development to VCCircle without revealing details. Snapdeal did not respond to email queries till the time of filing this report.
Snapdeal, run by Jasper Infotech Pvt. Ltd, was valued at around of $6.5-7 billion in February 2016 when it last raised $200 million in funding. Indications are that it will be sold to Flipkart at around $1 billion valuation. Going by this, the value of ESOPs will go down drastically or even become worthless.
Snapdeal is currently left with around 2,200 employees after massive job cuts in February 2017. The deal might also involve repricing of ESOPs so that employees don't end up getting close to nothing.
Cyril Amarchand Mangaldas may also look at severance packages for employees who will be affected by the merger.
Recently, Bahl and Bansal wrote a letter to employees claiming that the “well-being of the entire team” was their top priority. "While our investors are driving the discussions around the way forward, I am reaching out to let you know that the well-being of the entire team is mine and Rohit's top and only priority. We will do all that we can, and more, in working with our investors to ensure that there is no disruption in employment and that there are positive professional as well as financial outcomes for the team as the way forward becomes clear. Let me repeat, your well-being is our #1 priority," Bahl wrote in the email.
“The company’s annual performance review is nearly complete and given the incredible progress we have made around our profitability journey…the overall increments this year are higher than those offered last year,” he wrote.
In February, Snapdeal laid off 500-600 employees across the e-commerce marketplace and its subsidiaries, mobile wallet Freecharge and logistics wing Vulcan Express. According to Snapdeal’s standalone financials, the company’s employee expenses for the year through March 2016 more than doubled to Rs 911 crore from Rs 367 crore the year before.