“If things go according to the plan, then Snapdeal might hold a board meeting on Wednesday and NVP might finally come on board on the merger of Snapdeal and Flipkart,” said a source familiar with the development.
SoftBank held the informal meeting with Snapdeal board members after failing to convince NVP last time. NVP, SoftBank and Snapdeal, however, refused to comment on the issue.
Without a nod from Nexus, SoftBank cannot go ahead with the planned merger. The seven-member board of Jasper Infotech, Snapdeal’s parent company, includes representation from investors SoftBank, Kalaari Capital and NVP, as well as co-founders Kunal Bahl and Rohit Bansal. NVP and Kalaari were early-stage investors in Snapdeal.
Sources highlighted that valuation had been one of the hurdles in the deal, as Kalaari Capital and Nexus were not in agreement with the valuation given by SoftBank. However, that could change after NVP’s approval. Kalaari has already given its nod to the proposed arrangement. Snapdeal was valued at $6.5 billion in its last funding round in February 2016. The valuation, however, has shrunk since then, and the potential deal could be struck at a discounted rate.
On May 2, SoftBank spent close to three hours trying to convince NVP to drop its veto against the deal. But the Snapdeal board meeting, that kept industry watchers hooked through the day, failed in its mission. Board members headed straight for lunch, without any sign of a deal with Flipkart. Softbank had got veteran Kabir Misra, one of the seven members on the Snapdeal board, to lead the talks. It wasn’t clear if he had flown down from his Silicon Valley office or attended the board meeting via video-conferencing, but even Misra, president and CEO of SoftBank China and India Holdings, could not persuade Nexus to agree on the proposed terms for selling Snapdeal.
Naren Gupta, co-founder of Nexus, has been the man holding up the deal unless his company got a payout of at least $80 million, sources said. SoftBank currently owns 33 per cent in Snapdeal, while Nexus has roughly a 10 per cent stake and Kalaari holds eight per cent in the company, according to documents filed with the Registrar of Companies.
Sources said co-founders Bahl and Bansal want Snapdeal to be sold at a valuation of close to $2 billion, even as SoftBank is trying to pin the deal at $1 billion or less.