Troubled e-commerce firm Snapdeal is likely to finalise the particulars of its sale to rival Flipkart in a board meeting scheduled for Tuesday, media reports said.
The meeting’s key agenda will be to address the concerns of early investor Nexus Venture Partners, which holds 11% in the company, a report in Business Standard said citing people aware of the development.
The meeting is also likely to see discussions around the final compensation to Snapdeal founders Kunal Bahl and Rohit Bansal, who could be cumulatively paid $40-60 million pre-tax, said another report in The Economic Times.
All three were initially opposed to the proposed sale that values the beleaguered e-commerce company at $1 billion, a far cry from its peak valuation of $6.5 billion. The deal is being orchestrated by Snapdeal’s largest shareholder SoftBank Group.
So far, SoftBank has been able to get Kalaari Capital, another early-stage investor in the e-commerce firm, to agree to the terms of the deal. The merger can move ahead only if at least two of Snapdeal’s majority shareholders give their consent, the ET report added.
An email sent by VCCircle to Snapdeal seeking confirmation and comment went unanswered.
Kalaari and Nexus were locked in a stalemate with SoftBank over its offer to invest in the e-commerce firm and its mobile wallet subsidiary FreeCharge, wherein it proposed a valuation that was less than half of what Snapdeal racked up in its last funding round in February 2016. They rejected the offer “as the valuation drop would have led to a significant increase in SoftBank’s stake and a corresponding slide in their ownership.”
SoftBank, which has pumped over $900 million into Snapdeal so far, has two seats on its board while Kalaari and Nexus have one each.
Snapdeal’s other investors include SoftBank-backed Chinese e-commerce company Alibaba, Taiwanese contract electronics manufacturer Foxconn, eBay Inc., Indian media company Bennett Coleman & Co. Ltd, and venture capital investors such as Bessemer Venture Partners, Intel Capital, Iron Pillar, and Ratan Tata. The company has raised $1.65 billion in total till now.
In the second half of last year, eBay Inc, a minority investor in Snapdeal, had offered to sell eBay India to Snapdeal and put extra money into the company, but that offer was rejected by the company’s board over differences in proposed valuation. Earlier this month, Flipkart had bought ebay India when it raised $1.4 billion.
Two weeks ago, VCCircle had reported that Snapdeal has hired law firm Cyril Amarchand Mangaldas to advise them on the merger transaction.