SoftBank launches talks with Flipkart for Snapdeal sale
11 April 2017
Following months of negotiations, Japan's SoftBank, the largest investor in Jasper Infotech-owned Snapdeal, is believed to have initiated the sale of the business to Flipkart by offering Snapdeal founders Kunal Bahl and Rohit Bansal $50 million for their stake, says a Financial Express report citing sources.
The sources said Kunal Bahl and Rohit Bansal, who together own 6.5 per cent equity in Snapdeal, are expected to receive $25 million each for sale of their shares. At the same time, SoftBank, which holds a little more than 30 per cent stake in the business, has started the process of acquiring shares of other investors, including Kalaari Capital, Nexus Venture Partners and Bessemer Venture Partners. Kalaari Capital owns a little less than 8 per cent shares in the ecommerce company; Nexus Venture Partners' equity is about 11 per cent.
When asked about the development in an email query by FE, SoftBank declined to comment.
However, according to the paper, sources close to the development explained, ''Negotiations are still on. The conversation is largely around deciding the fate of the 2,500 employees who currently work at Snapdeal.''
It is believed that the sale of the e-commerce business will involve a share swap. The swap ratio being talked about is 1:10 in favour of Flipkart.
Last week, in a four-hour-long board meeting, the investors in Snapdeal failed to come up with a concrete plan. A proposal to sell Snapdeal to Flipkart is understood to have been favoured by SoftBank, but others are believed to have opposed it. It isn't known whether Kalaari Capital and Nexus Venture Partners are opposed to the sale of Snapdeal to a rival e-retailer or unhappy about the share swap ratio.
With losses are spiralling, Snapdeal, it is understood, is currently left with around Rs500 crore in the bank. The e-retailer is believed to be losing Rs50 crore every month, although these numbers could not be verified. According to the filings with the registrar of companies (RoC), Snapdeal had Rs1,072.2 crore as cash and bank balances as on 31 March 2016.