According to reports, Snapdeal will be moving in to a single tower as its operations dwindle, thus the brand is going to vacate more than 60% of its office space in Gurgaon. The e-commerce player has been facing some rough times in the recent past as several reports emerge of a merger with rival Flipkart, which is supposedly one of the options its largest shareholder – SoftBank – has been pushing for.
The founders had admitted to bad decision-making which brought about the brand’s cash crunch and said they would not be taking salaries – for an unspecified duration. At the time, Snapdeal had even sacked about 60% of its workforce, while shutting down some of its fringe operations. The e-tailer’s Bengaluru office, which was supposed to be the company’s technology centre, now has some 20-30 executives.
According to Mint, Snapdeal’s needs to raise funds or sell itself quickly as its cash reserves are diminishing fast. With the current state of things, the online marketplace may not last more than four months. Thus, its board may face added pressure in reaching a consensus to decide over valuation and sale. A source close to the developments says, “A deal has to be closed soon, one way or the other. The company doesn’t have much cash left. It can run operations for another 3-4 months but after that it’s tough to see how it’ll survive.”
While Snapdeal’s largest investor, SoftBank, has been looking to sell the company to larger rivals like Paytm or Flipkart, the other board members – Nexus Venture Partners, Kalaari Capital and co-founders Kunal Bahl and Rohit Bansal – are demanding that SoftBank should buy-out their shares for the sale to be approved.
For SoftBank to buy out the stakes, valuations need to be done and this where the bone of contention lies within the stakeholders. Being that Nexus and Kalaari’s largest investments are in Snapdeal, the two home-grown VC firms could be damaged if the deal is not carried out well.
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