According to the media reports, Snapdeal’s early investor Nexus has reached an agreement with the SoftBank Group, the Japanese firm which could allow Flipkart to acquire Snapdeal.
The three parties in the tussle: Snapdeal founders, Nexus and Kalaari had expressed their terms and condition to SoftBank Group, and were only waiting for SoftBank to match their demand. According to the terms of payment, Snapdeal founders would get $15 million and Nexus would get around $50-$60 million.
Earlier, it was reported that SoftBank Group has reported losses on account of Snapdeal and Ola in the fourth quarter.
SoftBank Group had picked up Snapdeal and PayTM over Flipkart in the year 2014, while the latter has been extremely successful after demonetization, the former hasn’t been able to pick up its game.
Initially, SoftBank Group had also expressed its willingness with regards to retaining employees of Snapdeal and passing off the benefits of the deal with Flipkart to them, but there is not much clarity about this as of now.
People Matters had reported in February about the reluctance of the investors to reinvest in Snapdeal and there were rumors that Snapdeal might lay off people affecting 30% of the workforce. Later, it was confirmed that the e-commerce firm let go of 600 people.
Reportedly, SoftBank has been trying to sell Snapdeal to Flipkart for $1 billion. Flipkart is now expected to sign the term sheet with Flipkart, and start the process of due diligence (which takes around two months or more) with SoftBank Group.
According to Reuters, SoftBank is acting as the consolidator and wants to take up a more active role in the Indian startup scene. Previously, it has supported Indian start-ups at many occasions, since 2014. Last year, it infused a funding around $90 million in budget hotel brand Oyo rooms.
The investment was made in two tranches- company received $61 million at first and later $29-million, a mix of equity and debt from its largest from the investment firm.
And as previously reported by People Matters, the e-commerce industry in India is undergoing consolidation, especially after the recent investment by Tencent, eBay and Microsoft in Flipkart, and now the breakthrough between Snapdeal founders, Nexus and SoftBank Group, which further cements this reality.