Flipkart is all set to Takeover Snapdeal
There has been news spamming all across the newspapers and websites about Flipkart buying the Snapdeal’s business to take over the online E- commerce company. However, the news is finally confirmed and Snapdeal will be offered on sale for close to $1 billion. Delhi based online E- commerce Snapdeal which is owned by founders Kunal Bahl and Rohit Bansal have given their approval for initiating the deal.
If the deal is successfully approved and the transaction is processed, then the Indian E- commerce marketplace is going to grow rapidly. Flipkart and Snapdeal are currently the country’s top E- commerce players which offer best in class products to the final users. After the deal is approved, Flipkart would be directly competing with Paytm and Amazon which are its biggest rivals.
With the signing of this deal, Kunal Bahl (one of the founders of Snapdeal) will receive a sum of $30 million as a cash payout. However, the complete sale is fixed at a massive deal between $750 million to $1 billion worth of funds. These figures were finally discussed in a board meeting of investors as Nexus Venture Partners agreed to the deal.
There will not be any participation from the Snapdeal founders after the two companies merge. There would also be a non- binding term sheet is anticipated to be signed in the next 72 hours of time. After the sheet is signed, Flipkart will completely acquire and have control over Snapdeal’s commercial and financial dues.
The whole process of acquisition will at least take two or three month’s time. There have been emails sent to Flipkart, NVP and Snapdeal regarding the acquisition and still, the companies have not responded to the emails sent to them.
The Tokyo-based SoftBank group is eyeing for a separate investment in Flipkart after the acquisition. SoftBank is already a big investor in Snapdeal and Paytm as it has provided upto $900 million and $1 billion worth funds in both the E- commerce companies.
Additionally, Nexus has also invested upto $45 million in Snapdeal and it currently holds a share of 11% in the company. Nexus is anticipated to receive around $60 million for holding shares in Snapdeal. However, a final confirmation is yet to happen whether the amount will be paid as a stock component or if it would be a cash payout.
The founders of Snapdeal Kunal Bahl and Rohit Bansal received Rs.80 Crores each for selling a part of their stakes to Ontario Teachers’ Pension Plan (a Canadian pension fund) in the year 2015. The company was then valued at a massive $6.5 billion.