Snapdeal staff may get Rs193 cr payoff after merger with Flipkart
15 May 2017
Online marketplace Snapdeal may pay Rs193 crore to its staff once it is taken over by larger rival Flipkart, as is expected to happen any day now.
According to PTI citing sources, if the deal goes through, the founders Kunal Bahl and Rohit Bansal will give half of their expected payout of $60 million for the proposed scheme, which would cover all current employees of Snapdeal.
"The founders have asked the Board to carve out $30 million (about Rs193 crore) from their settlement for payouts to the Snapdeal team. They want to ensure that the team does not get sidelined in any manner," the agency's sources said.
Some former senior executives of Snapdeal, who have left the firm in the past 12 months, could also benefit from the process.
Emails sent to Snapdeal by PTI did not elicit any response.
The intent is also to compensate for the ESOPs (stock options) that were issued to senior employees. The value of their shares and options have eroded and would be worthless once the deal is signed, one of the sources said.
The deal-linked payment would also be extended to employees who do not own ESOPs to reward those staying on with Snapdeal till the proposed transaction with Flipkart is complete.
If the deal goes through, Snapdeal founders will get $60 million (cumulative), of which half will be given to employees (See: Bahl, Bansal to get $30 mn each as Snapdeal-Flipkart merger nears).
Japanese conglomerate SoftBank, Snapdeal's largest investor, has initiated the process to sell the online marketplace, which is doing poorly compared to its rivals, to Flipkart.
It has managed to get board members, which also includes the founders (Kunal Bahl and Rohit Bansal) and early investors Kalaari and Nexus Venture Partners, to agree to the potential deal.
Nexus Venture Partners could get close to $80 million and a stake in the merged or new entity, while Kalaari could get about $70-80 million, the PTI report says.
According to regulatory filings, SoftBank currently 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.
A non-binding term sheet to start the due diligence by Flipkart for Snapdeal is expected to be signed soon between the two parties.
Snapdeal, once a leading player in the Indian ecommerce space, has seen its fortunes failing amid strong competition from US-based Amazon and Flipkart.
Compared to a valuation of about $6.5 billion in February 2016, the sale to Flipkart could see Snapdeal being valued at about $1 billion.
Vani Kola quits
Meanwhile, Kalaari Capital managing director Vani Kola has resigned from the board of Snapdeal, amid talks to sell the company to Flipkart.
According to regulatory documents accessed by the media, Kola sent her resignation letter to the board of Snapdeal on 2 May.
''I regretfully inform you that at this juncture I would be unable to continue to be a part of the board, hence, I hereby tender my resignation from the office of the director of the company and request the board to discharge me of my duties as a director of the company with immediate effect,'' said Kola in the letter.
Kola and Snapdeal didn't immediately respond to requests for comment on her resignation.