The Flipkart-Snapdeal merger, which is being deemed as the biggest consolidation in the history of Indian e-commerce sector, might get closed by next week, reported Business Standard.
According to sources close to the development, Flipkart has completed its due diligence and has found everything clean but the homegrown e-commerce market leader has still not come with a final number for the Snapdeal acquisition.
In the last one month, the e-commerce firm has checked Snapdeal’s books with a fine-comb and completed its due diligence a few days back.
If the deal does not goes through in the next few days, the Snapdeal board would have to extend the timeline or put the company on the block again. “The exclusivity clause ends next week. If they do not come back with an offer (before that), SoftBank, as well as other investors, can either extend the timeline or it can be open season,” according to BS’s source.
However, people close to the deal say the deal would get finalised in the next few days and an announcement would be done by next week.
The merged entity is expected to give a tough competition to the Jeff Bezos’ Amazon who recently decided to spend a whopping amount of $5 billion in India to gain significant share in the Indian e-commerce market.
According to Masayoshi Son, SoftBank founder, the deal will prove to be a win-win situation for both homegrown e-commerce players. After closing the deal. Softbank may infuse another $500 million to $1 billion in Flipkart through a transaction with Flipkart backer Tiger Global Management. The amount will give Flipkart more fuel to compete against Amazon.
Many of the minority shareholders in Snapdeal, including PremjiInvest, the personal investment arm of Wipro Chairman Azim Premji, have written to the company on more than one occasion seeking greater clarity on the terms of the deal. PremjiInvest is asking, how the rights of minority shareholders will be protected in the proposed deal. PremjiInvest is also building consensus among other investors, who also hold small stakes in Snapdeal, including Singapore's sovereign wealth fund Temasek and asset manager BlackRock, to potentially oppose special payouts to certain shareholders, including co-founders Kunal Bahl and Rohit Bansal and early backers Kalaari Capital and Nexus Venture once the deal concludes.
A lot of things are being worked out around the Snapdeal-Flipkart merger. Three separate sets of talks are happening for the other firms under Jasper Infotech brand, Snapdeal’s parent firm - Vulcan Express, FreeCharge and Unicommerce.
According to BS’s sources, chances are Vulcan Express, the logistics arm of the online marketplace, would be sold to Flipkart along with Snapdeal. Unicommerce, the e-commerce management firm of Jasper, is one company the promoters and NVP might stick to at least for the near future. Talks to sell FreeCharge are also on with mobile wallet major Paytm, and the process of carrying out due diligence is underway.