Snapdeal sale to Flipkart could happen soon; valuation still sticking point

The ongoing negotiation for the sale of Snapdeal to its larger Indian e-commerce rival Flipkart has let loose a barrage of reports in the media as well as a lot of speculation. Tech in Asia reached out to a source with first-hand knowledge of the negotiations to figure out what is real and what’s not at this point in time. Here’s what we learned.

Status of sale

Snapdeal’s last board meeting on Tuesday was less contentious than earlier ones and took a definite direction towards a merger of Snapdeal with Flipkart. The deal will be done in the next four to six weeks if discussions continue to make progress, but the shareholders have not agreed on the terms yet. “There can be many a slip between cup and lip,” said the source.

Players at the table

Japan's SoftBank is the largest stakeholder in Snapdeal — it invested around $900 million for 33 per cent of the company. Early investors Kalaari Capital and Nexus Venture Partners, holding eight per cent and 10 per cent of equity, respectively, are on the board, as are the founders Kunal Bahl and Rohit Bansal, who hold about 6.5 per cent. 

Bone of contention

The main bone of contention is the valuation at which Flipkart will acquire Snapdeal in an all-stock deal.

Snapdeal’s valuation was over $6 billion at its peak early last year. Investors and analysts have devalued it since then as its position in the market weakened. The best-case scenario for it now could be a sell-off at a valuation of $1 billion — but the early investors and the founders are negotiating to sweeten the deal. />

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