The proposed Snapdeal-Flipkart merger could well be on the rocks, with a board meeting of Snapdeal directors failing to resolve the issue. According to sources, Snapdeal’s biggest investor, SoftBank is still keen on a sale to Flipkart, but other stakeholders had certain concerns about the deal.
Snapdeal’s main investors include SoftBank (33 percent stake), Nexus Venture Partners (10 per cent stake), and Kalaari Capital (8 per cent stake). Founders of Snapdeal, Kunal Bahl and Rohit Bansal have a combined stake of 6.5 per cent in the company.
|Nexus Venture Partners||10%|
The board meeting, which lasted for around four hours did not help resolve the issues. According to the source, there is no clarity as to the reason why Nexus Venture Partners and Kalaari Capital have not reached a consensus, with rumours stating that it could possibly be on account of the share swap ratio.
There are talks of the share swap ratio being 1:10, wherein Snapdeal shareholders get 1 Flipkart share for every 10 Snapdeal shares owned by them, subject to the deal going through.
The Indian e-commerce section has seen tremendous competition, with Amazon beating Snapdeal to become the second largest company in this segment. Snapdeal has been plagued with a number of issues, including financial crunch, which led to the lay-off of over 600 employees recently.
The company has been trying hard to boost employee morale, conducting meetings and townhalls with employees.
Snapdeal’s board consists of seven members, including two representatives of SoftBank and one each from Kalaari Capital and Nexus Venture Partners. Co-founders Kunal Bahl and Rohit Bansal are the other members, with Akhil Gupta, vice-chairman of Bharti Enterprises acting as an independent director.