The sale of beleaguered ecommerce marketplace Snapdeal seems to be full of roadblocks. The board of the company is now divided again, making its fate more uncertain, reports the Mint.
While SoftBank has been orchestrating and pushing for a sale to rival Flipkart, Snapdeal founders Kunal Bahl and Rohit Bansal are reportedly pushing for a sale to Infibeam. The other option they prefer is making Snapdeal survive independently by cutting jobs and the size of its business.
Last week, Infibeam, the only listed ecommerce firm in India made an offer of around $700 million in stock for Snapdeal.
Mint reports that while the offer is lower than Flipkart’s $850-million bid, Snapdeal cofounders are keen on selling the company to Infibeam. This is probably because, in that scenario, Snapdeal founders may retain control of Snapdeal while they will have to leave the company if it is sold to Flipkart.
SoftBank has been pushing to sell Snapdeal to Flipkart in order to cut its losses on an investment that has faltered badly on. And until last week, a sale of Snapdeal to Flipkart seemed the likeliest outcome even though the proposed deal had been delayed because of differences over valuation and other terms.
Initially, the early investors and the next biggest shareholders of Snapdeal, Kalaari Capital and Nexus Venture Partners opposing the sale. Several negotiations later, Softbank managed to bring them on board.
And while due diligence was underway, one of Snapdeal’s smaller investors PremjiInvest - Azim Premji’s investment firm – wrote to the board expressing its dissent over the proposed sale, especially to do with the amount being paid to the founders and other shareholders.
After overcoming all of this, Snapdeal last week rejected Flipkart’s $700-750 million buyout offer as it was expecting at least $1 billion.
In the case of merger with Infibeam, the listed company will have to get shareholder nod to seal the deal. One of the sources told ET that this will pave way for a clear exit for shareholders in Snapdeal, as it will be merged with a public company.
Snapdeal, which has raised nearly $2 billion in cash, hit a peak valuation of $6.5 billion in February 2016 when it received $50 million from investors.
Snapdeal is also reportedly looking at the option of selling its payments arm Freecharge and logistics unit Vulcan express to garner enough funds to survive independently.
Freecharge has been in talks with a number of potential buyers including Paytm, MobiKwik, BoB, Times Internet, Axis Bank with Amazon being the latest one to offer to buy the digital payments firm.