Published: Wed, May 24, 2017
Money | By Armando Alvarado

It's official! Flipkart has signed the term-sheet to buy Snapdeal

It's official! Flipkart has signed the term-sheet to buy Snapdeal

A non-binding term-sheet to start due diligence by Flipkart for Snapdeal is expected to be signed in the next few days between the two parties.

The term-sheet was signed over the weekend and Snapdeal, run by Jasper Infotech Pvt Ltd, has been valued at $1 billion, The Economic Times reported, quoting people familiar with the matter. Kalaari Capital and Nexus Venture Partners, among the largest investors in the e-tailer with 8% and 10% ownership, respectively, have struck a settlement with SoftBank to sell their shares, while the smaller shareholders are unlikely to get compensated by the Japanese group which is orchestrating the sale of Snapdeal to Flipkart.

According to regulatory filings, SoftBank now owns over 30 per cent in Snapdeal, while Nexus has roughly a 10 per cent stake and Kalaari holds 8 per cent share in the firm.

Snapdeal and Flipkart did not reply to email queries from ET.

"We can not comment on the ongoing negotiations but we hope for a resolution soon", said a spokeswoman for SoftBank, the largest shareholder in Snapdeal and the primary mover behind the sale of the online marketplace.

In August past year, VCCircle first reported that Snapdeal had initiated preliminary merger talks with Flipkart and Amazon.

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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.

After a long period of negotiations, SoftBank managed to get Nexus and Kalaari, along with Snapdeal founders, Kunal Bahl and Rohit Bansal, to agree to the potential deal earlier this month. We reported earlier that Kalaari had agreed to sell its stake to SoftBank and subsequently in our May 15 edition, we had written about Vani Kola, MD at Kalaari Capital, resigning from the board of Snapdeal. Earlier too, the Japanese conglomerate recorded losses on its investments in Snapdeal in February this year and in November last year. The company has raised $1.65 billion in total till now. Other minority shareholders in Snapdeal including Ratan Tata have expressed concerns about the proceedings of the sale between SoftBank and the two other large investors, sources said.

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. Post her resignation, Kalaari Capital does not have any representative on Snapdeal's Board.

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The list of crises at online marketplace Snapdeal seems never-ending.

Prominent businessman Azim Premji has reportedly caused a major obstacle in the potential merger of Snapdeal with Flipkart.

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