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Snapdeal board accepts Flipkart’s takeover offer for $950m

Snapdeal board accepts Flipkart’s takeover offer for $950m
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The board of online marketplace Snapdeal has given the green signal to the company to continue negotiations to sell itself to Flipkart, which increased its buyout offer to $900-$950 million last week. The board which runs Snapdeal, Jasper Infotech approved Flipkart’s bid of $900-$950 million last week. A deal is now pending and is awaiting the approval of Snapdeal shareholders, sources familiar with the matter said.

The development implies that Snapdeal’s largest investor SoftBank Group Corp. may have won the boardroom battle against two other investors, Nexus Venture Partners and Kalaari Capital, as well as Snapdeal founders Kunal Bahl and Rohit Bansal, both of whom wanted to sell the company to Infibeam Inc. or stay independent. Snapdeal and Flipkart will start negotiations on Monday to finalize a sale and purchase agreement (SPA), according to people familiar with the matter. An SPA is a contract that will bind the two companies to conclude the deal. Snapdeal for this purpose will call a shareholders’ meeting to get the deal approved by all of them. It has more than 25 institutional shareholders as well as dozens of individual part-owners. (Source: livemint: Snapdeal accepts Flipkart takeover offer)

On 24 July, Mint reported that the board of Snapdeal was divided about the company’s proposed sale, as founders Bahl and Bansal were pushing for a sale to Infibeam or getting Snapdeal to survive as an independent company by cutting both a majority of jobs and the size of the business.

According to livemint, Snapdeal accepts Flipkart takeover offer. Flipkart’s offer includes Snapdeal’s marketplace business and software provider Unicommerce. The company is also likely to include its logistics unit Vulcan Express in the sale. Separately, Indian private-sector lender Axis Bank is the frontrunner to acquire Snapdeal’s digital payments unit FreeCharge for $60 million, the sources said.Japan’s solar-to-tech conglomerate. The board also considered a $700 million share-swap offer by listed e-commerce firm Infibeam but rejected it as too low, one of the sources said. SoftBank is keen to consummate the deal and is also expected to invest fresh capital in Flipkart and provide a partial exit to Flipkart’s largest shareholder Tiger Global Management.

But Flipkart’s leg up in this ecommerce war requires Azim Premji’s blessings. According to ET Now, the merger needs Premji Invest’s approval and Flipkart is yet to agree to the terms put forward by the billionaire investor. Premji has objections with respect to the special payments to certain shareholders including its two co-founders and two early backers, Bloomberg had said in an earlier report. Under the proposed terms, early investors, like Kalaari Capital and Nexus Venture Partners, would receive $60 million in addition to their new equity in Flipkart, while founders, Kunal Bahl and Rohit Bansal, would get a combined $30 million. 

Snapdeal accepts Flipkart takeover offer: If the sale of Snapdeal to Flipkart is completed, it will be the biggest ever in India’s start-up ecosystem, months of negotiation finally bearing a fruitful conclusion for both the companies involved in the matter.

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