Snapdeal investors Softbank and Nexus Venture Partners have reportedly come to an agreement on the terms which could ensure that Flipkart acquires Snapdeal. The founders and Nexus have agreed to Softbank’s terms according to which the founders are to get $25 million each while Nexus will receive somewhere close to $100 million and Kalaari will get around $70-$80 million.
Flipkart is now expected to sign the term sheet within the week and due diligence for the deal will start thereafter.
In February 2016 Snapdeal was valued at $6.5 billion, however, since then the valuation has reduced which could see Snapdeal’s valuation at around just $1 billion, according to reports. Softbank had also said that it suffered a loss of $1 billion (Rs 6,500 crore) on its investment in Snapdeal – which is almost the same amount of money they had invested in the etailer.
According to regulatory filings, Kalaari holds 8 percent share, while Nexus has about 10 percent stake and SoftBank with over 30 percent in the Gurgaon-based e-commerce platform. If completed, this would be the biggest acquisition in the segment of e-commerce in India. This is expected to have a profound effect on the sector – which is going through intense competition in India.
Freecharge, which is Snapdeal’s mobile wallet service, is reportedly being sold to Paytm and a non-exclusive term sheet is also being signed to acquire the Japer Infotech subsidiary.
With India’s e-commerce companies focusing on profitability and reducing burn rates and expenses, funding for these brands has dried up significantly. Adding to the pressure is the rivalry faced from global brands like Amazon that come with monetary muscle.