Softbank, which is orchestrating a sale between Snapdeal and Flipkart and even Freecharge and Paytm, is reportedly wants to take it slow with the sale of Freecharge to Paytm.
According to a report by FactorDaily, SoftBank wants to go slow on the transaction. It wants the Flipkart-Snapdeal sale to be completed first, and it wants it to happen as soon as now.
The reasoning behind this is that selling Freecharge first will give cash-starved Snapdeal funds to keep its operations running and it will have lesser leverage with SoftBank to close to merger with Flipkart early.
Freecharge is owned by Snapdeal, which Jasper Infotech, Snapdealâ€™s parent company acquired in April 2015 for $400 million.
FactorDaily reports that as part of the proposed merger of Snapdeal and Flipkart â€” Indiaâ€™s largest ecommerce company by gross sales â€” Freecharge was to be folded into Paytm, in a deal estimated to be between $40 million and $50 million.
AS due diligence is underway for the Flipkart-Snapdeal merger, differences over valuations and other terms in the proposed merger continue between Snapdeal board members representing different parties.
The merger is being orchestrated by SoftBank, which has played a role in bringing Snapdeal to the near-extinction stage it is in now.
As per the report, the situation may have become adversarial between SoftBank and Snapdeal.
â€śIf Snapdeal gets the money (for Freecharge), it will get a runway for the next six to seven months, and SoftBank doesnâ€™t want to take the risk,â€ť one of sources told FactorDaily.
Nexus Venture Partners and founders Kunal Bahl and Rohit Bansal had put in $17.5 million into Snapdeal on May 29 as emergency funding to keep operations running.
Earlier in May, Paytm and FreeCharge had exchanged term sheets for their merger, initiated by SoftBank, which had announced an investment of $1.4 billion in the acquirer.
Meanwhile, SoftBank has completed its due diligence on Flipkart, after which Bengaluru company will make its final proposal to Snapdeal.
â€śIt is very likely for SoftBank to hold the FreeCharge deal unless the Flipkart gives the final agreement to Snapdeal,â€ť the source said.