Livemint: July 26, 2017
New Delhi: The board of online marketplace Snapdeal has given the go-ahead to the company to continue negotiations to sell itself to Flipkart, which had increased its buyout offer to $850 million last week, three people familiar with the matter said.
The development implies that Snapdeal’s largest investor SoftBank Group Corp. has won the boardroom battle against two other investors and Snapdeal founders, Kunal Bahl and Rohit Bansal, both of whom wanted to sell the company to Infibeam Inc. or stay independent.More From Livemint »
Snapdeal and Flipkart will start negotiations on Monday to finalise a sales and purchase agreement (SPA), the people cited above said. An SPA is a contract that will bind the two companies to conclude the deal.
Snapdeal will then call for a shareholders’ meeting to get the deal approved by all of them, the people said. It has more than 25 institutional shareholders as well as dozens of individual part-owners.
SoftBank has already reached out to smaller shareholders in Snapdeal to seek their approval on the current terms of the deal, one of the three people said.
On 18 July, Mint had reported that Flipkart sent a revised buyout offer of roughly $850 million to Snapdeal. On 24 July, Mint reported that the board of Snapdeal was divided about the company’s proposed sale, as Snapdeal founders Bahl and Bansal were pushing for a sale to Infibeam or getting Snapdeal to survive as an independent company by cutting both a majority of jobs and the size of the business.
Snapdeal, SoftBank and Flipkart declined comment.Subscribe to Our Newsletter »
As part of the all-stock offer of $850 million, Flipkart has offered to pay $650-700 million in stock immediately and another $150 million at a later date. Flipkart’s offer includes Snapdeal’s marketplace business and software provider Unicommerce. The company is also likely to include its logistics unit Vulcan Express in the sale, the people cited above said.
Separately, Axis Bank Ltd is nearing a deal to buy Snapdeal’s digital payments platform Freecharge for Rs350-400 crore in cash, Mint reported on Wednesday.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.