A marriage between two of India’s leading home-grown e-commerce companies Flipkart and Snapdeal is imminent, with the latter moving a step closer to agreeing to a distress sale to the Bangalore-based company at a Board meeting on Tuesday. As per a report by Mint, the agreement was reached at the meeting despite a few differences about the price and terms of sale between Snapdeal’s largest investor SoftBank and its other two key shareholders Nexus Venture Partners and Kalaari Capital.
Nexus and Kalaari have been at loggerheads over the sale of the struggling Snapdeal to Flipkart, which had offered to pay US$1 billion in equity. Snapdeal, which until a couple of years ago enjoyed the second position in India’s fledgling e-commerce space, hit a peak valuation of US$6.5 billion early last year. The company saw its valuation dropping considerably since, with US giant Amazon gradually eating its market share.
In total, Snapdeal has raised about $2 billion in investment, which included a US$627 million from SoftBank in 2014. Its other investors include BlackRock, Temasek, Foxconn, eBay, Premji Invest, Intel Capital, Bessemer Venture Partners, and Ratan Tata. Recently, eBay invested nearly US$500 million in Flipkart and sold its Indian unit to the Bangalore-based company.
The Mint report said citing sources that after intense deliberations at the Board meeting, Snapdeal Co-founders Kunal Bahl and Rohit Bansal, besides Nexus and Kalaari representatives, agreed to the acquisition proposal put forward by SoftBank. Until the Board meeting, Snapdeal promoters and VCs were not in favour of selling to Flipkart, as they were hoping to find a better suitor with a better price, or attract new backers to turn the company around.
There were also news reports that Alibaba-backed m-commerce firm Paytm was in the fray to buy out Snapdeal’s payments unit Freecharge, but it backed out in the last minute for some unknown reasons.
Founded in February 2010, Snapdeal is the third largest online marketplace in India after Amazon and Flipkart. It currently lists 65 million-plus products across 1,000-plus categories from over 125,000 regional, national, and international brands and retailers. With millions of users and more than 300,000 sellers, Snapdeal delivers to over 6,000 cities and towns in India.
In January this year, Snapdeal roped in Housing CEO Jason Kothari as its Chief Strategy and Investment Officer to turn around the company’s fortunes. A few days into his appointment, Snapdeal axed around 3,000 jobs across various departments. There have been reports that various online sellers are planning to sue the company over non-payments of dues. A Singapore-based seller recently told e27 on the condition of anonymity that Snapdeal owes close to US$5,000 to the company.
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