Finally, the word is out regarding the acquisition of Snapdeal by Flipkart. Since early 2016, Snapdeal wasn’t in a strong position. Speculations were going on about the future of the company post the subsequent devaluations happening. Snapdeal’s biggest investor Softbank had filed a loss of USD 1.5 Billion in valuation through its two Indian companies – Ola and Snapdeal. Amidst everything going south, Softbank was constantly pushing for selling out Snapdeal. Finally, it found a buyer in Flipkart and was able to convince Nexus VP for the merger. The term sheet has been prepared and within the next few months, the Snapdeal Flipkart Merger will be completed.
Clashes Between Nexus Venture Partners and Kalaari Capital?
It is said that the Snapdeal Flipkart merger was stuck in the middle from a very long time due to disagreements between Nexus VP and Kalaari Capital. There were clashes about the terms of the deal. Nexus was pushing for an all cash deal while Kalaari was trying to convince it for a cash cum stock deal. Finally, Nexus Venture Partners’ approval has been taken in the recent board meeting and the sale is going through. Flipkart has already finalised the term sheet and due diligence will be initiated soon.
Snapdeal Founders Receive $30 Million on Exit
Reports suggest that Snapdeal Founders have decided to exit as soon as the deal goes through. They own only 6.5 percent in the company as of now. They will receive $30 Million each as per a Moneycontrol.com report.
“The company’s board has reached a consensus and due diligence is likely to take place from next week. Almost all the deal contours have been finalised,”
a company official said on condition of anonymity.
More than 2500-3000 former and current employees also hold approximately 5-6% in Snapdeal in the form of ESOPs. It is still not clear whether they will be allowed to vest their shares yet or not.
It is also speculated that Softbank will invest upwards of $1.5Billion to the merged entity once all the due diligence is completed. What do you all think, is this consolidation a good news or a bad news for the Indian Startup industry? You can let us know in the comments below.