After a long wait for what was inevitable, it is finally happening, SoftBank and Flipkart have finally succeeded in their mission – ‘Snapdeal Merger.’ According to reports, Flipkart will be merging the Snapdeal entity at a valuation of just USD1 Bn. At the start of this week Snapdeal had agreed to sign a non-binding Letter of Intent (LoI) for the merger. A non-binding term sheet signifies that at the end of the due diligence, Snapdeal Board as well as Flipkart can walk away from the deal without any obligations. The deal is expected to get signed in the coming week.
Nexus Venture Partners is expected to receive USD 100 Mn along with a stake in the new entity. Kalaari Capital is expected to get around USD 70 Mn-USD 80 Mn, while the Snapdeal founders will get USD 30 Mn each post their exit from the company.
Even after Softbank, which is the largest shareholder in the company, gave the final approval to the proposed merger, the deal could not materialize at that time as investor Nexus Venture Partners refused to settle on the valuation. But after a few days as Nexus came onboard with the sale of Snapdeal. SoftBank has said that it suffered a loss of USD 1 billion on its investment in Snapdeal during 2016-17, almost matching the money it put in the home-grown marketplace.
Till date, SoftBank has invested about USD 900 Mn in the company and has a 33% stake. Kalaari and Nexus hold 8% and 10% stakes respectively, and the founders, Kunal Bahl and Rohit Bansal have a combined stake of 6.5% in the company.
