According to sources close to the deal, three months after SoftBank, the e-commerce player’s largest investor, floated the idea before the Snapdeal board, Flipkart, the Bengaluru-based marketplace major, started the process of due diligence last week.
While the term sheet was not signed last week, sources said the process of due diligence was given the go-ahead after Snapdeal’s board of directors agreed unanimously to Japanese telecom major’s proposal to sell the beleaguered e-commerce player.
It is a matter of another week before Flipkart completes the process and after that, the merger of the two companies would start.
The countdown for the closure of the Gurgaon-based online marketplace began soon after the Snapdeal board signed the non-binding term-sheet, giving SoftBank the official go-ahead to start proceedings to sell Snapdeal to Tiger Global-backed Flipkart.
SoftBank, in an email reply to the query, said it would not comment on the details of the negotiations.
Flipkart, led by Sachin and Binny Bansal, does not plan to keep the Snapdeal brand alive. According to sources close to the Snapdeal board, unlike Myntra and Jabong, which are being run independently under Flipkart’s umbrella brand, Snapdeal’s journey is likely going to end within a year of the merger.
Snapdeal, whose valuation came down from $6.5 billion to less than a billion in the past one year, had to let go of a major chunk of its employees.
Nexus Venture Partners, another investor in Snapdeal, could get close to $80 million and a stake in the merged or new entity, while Kalaari, a third investor, could get $70-80 million.
Snapdeal co-founders Kunal Bahl and Rohit Bansal would get around $60 million for their 6.5 per cent stake in 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.
Meanwhile, Snapdeal’s online wallet company, Freecharge, has signed a non-binding term-sheet with Paytm, which is interested in acquiring the company. According to Paytm, it will buy the company only if it adds enough value to the merchant base and is priced correctly.
Source: Business-Standard