SoftBank moots Snapdeal sale to Flipkart, proposed deal set to be biggest in Indian ecommerce
NEW DELHI | BENGALURU: SoftBank, the largest shareholder in Snapdeal, held boardroom discussions on the proposed sale of the online marketplace to rival Flipkart on Tuesday, according to two people aware of the development.
According to the terms proposed by the Japanese media and telecom conglomerate, Snapdeal shareholders will get one share of Flipkart for every ten they own, said the people cited above. Early investors in Snapdeal — Kalaari Capital and Nexus Venture Partners — have also asked for about $100 million each from the sale, the sources said.
The proposed sale could see SoftBank pick up a 20% stake in the country's largest ecommerce company for about $1.5 billion, in the process buying out $500 million to $1 billion worth of Tiger Global's holding in Flipkart, according to two people aware of the matter.
Alibaba-backed Paytm E-commerce has also discussed a potential acquisition of Snapdeal, but the valuation offered was much lower than that offered by Flipkart, added another source.
The deal, if completed, will mark the biggest acquisition in the Indian ecommerce industry and also redefine contours of the Indian online retail market where US' Amazon and China's Alibaba are also major players. "A final decision on the sale is yet to be taken," the person said.
The meeting signals easing of tensions between Kalaari and Nexus, and SoftBank, said one of the sources mentioned above.
When contacted by ET, Snapdeal spokespersons denied that any decision had been taken by the board. SoftBank, Flipkart, Kalaari and Nexus did not reply to emailed queries sent late on Tuesday evening.
SoftBank, which holds a dominant 33% stake in the New Delhi-based Snapdeal, mooted the plan at a meeting in the city attended by all the major stakeholders in the company.
Kalaari and Nexus own about 8% and 10%, respectively, in the company founded by Kunal Bahl and Rohit Bansal. The two co-founders together own about 6.5% of the company, which at its peak, was valued at about $6.5 billion.
Kalaari, which has invested about $27.5 million in Snapdeal's parent Jasper Infotech, earned handsome returns estimated at about $100 million when it sold a portion of its stake to SoftBank in late 2014. Nexus, which has invested $40-50 million in the company, has not sold any of its stake.
Governance rights for SoftBank have also been discussed as part of the deal.
The decision to offload Snapdeal from its books is possibly due to a change in its investment strategy aimed at consolidating its investments in India.
According to the terms proposed by the Japanese media and telecom conglomerate, Snapdeal shareholders will get one share of Flipkart for every ten they own, said the people cited above. Early investors in Snapdeal — Kalaari Capital and Nexus Venture Partners — have also asked for about $100 million each from the sale, the sources said.
The proposed sale could see SoftBank pick up a 20% stake in the country's largest ecommerce company for about $1.5 billion, in the process buying out $500 million to $1 billion worth of Tiger Global's holding in Flipkart, according to two people aware of the matter.
Alibaba-backed Paytm E-commerce has also discussed a potential acquisition of Snapdeal, but the valuation offered was much lower than that offered by Flipkart, added another source.
The deal, if completed, will mark the biggest acquisition in the Indian ecommerce industry and also redefine contours of the Indian online retail market where US' Amazon and China's Alibaba are also major players. "A final decision on the sale is yet to be taken," the person said.
The meeting signals easing of tensions between Kalaari and Nexus, and SoftBank, said one of the sources mentioned above.
When contacted by ET, Snapdeal spokespersons denied that any decision had been taken by the board. SoftBank, Flipkart, Kalaari and Nexus did not reply to emailed queries sent late on Tuesday evening.
SoftBank, which holds a dominant 33% stake in the New Delhi-based Snapdeal, mooted the plan at a meeting in the city attended by all the major stakeholders in the company.
Kalaari and Nexus own about 8% and 10%, respectively, in the company founded by Kunal Bahl and Rohit Bansal. The two co-founders together own about 6.5% of the company, which at its peak, was valued at about $6.5 billion.
Kalaari, which has invested about $27.5 million in Snapdeal's parent Jasper Infotech, earned handsome returns estimated at about $100 million when it sold a portion of its stake to SoftBank in late 2014. Nexus, which has invested $40-50 million in the company, has not sold any of its stake.
Governance rights for SoftBank have also been discussed as part of the deal.
The decision to offload Snapdeal from its books is possibly due to a change in its investment strategy aimed at consolidating its investments in India.
