Flipkarts offer for Snapdeal is non-binding, due diligence may start next week as Softbank seeks to bridge consensus on departure payouts to investors Kalaari, Nexus
Indias biggest on-line marketplace Flipkart has made an informal offer to buy fighting smaller competing Snapdeal for $1 billion in an all-stock deal, amid persistent differences between Snapdeals biggest investor SoftBank Group and two other crucial shareholders.
While SoftBank, Nexus Venture Partners and Kalaari Capital are yet to conclude their disagreement, the most recent round of talks has pushed them closer to a deal, three people aware of the discussions said, requesting anonymity as the talks are private.
Flipkarts offer is a non-binding one and an official term sheet will likely be signed over the next couple of days, with all the due diligence procedure expected to commence by next week, the people cited above said.
Flipkart and Snapdeal did not promptly respond to requests for comment.
On 3 May, Mint first reported the board of directors of Jasper Infotech moved a step closer to agreeing to a distress sale to Flipkart, with SoftBank finally convincing Snapdeal co-founders Kunal Bahl and Rohit Bansal, Nexus and Kalaari to consent to sell the company to Flipkart.
Last month, Flipkart offered $1 billion in stock to buy Snapdeal (excluding FreeCharge). It is expected to make another offer once the differences at Snapdeals board are concluded.
Kalaari and Nexus are still feuding over their departure payouts from SoftBank, the individuals mentioned above said. Snapdeal founders Bahl and Bansal have been offered $15 million each, with an additional $30 million for the complete management team and employees at Snapdeal.
While the board is yet to reach a consensus on the departure payouts to Kalaari and Nexus, the due diligence procedure may start next week, following the deal is tabled before all the shareholders.
Investment bank Credit Suisse, which helped Snapdeal raise capital in 2014, is representing Snapdeal in the planned deal with Flipkart.
Separately, online payments company Paytm is in discussions to buy Snapdeal-owned payments company FreeCharge in a fire sale. The business has offered to pay $40-$50 million for buying FreeCharge in an all cash deal.