SoftBank prods for Snapdeal-Flipkart merger

Japan’s SoftBank plans to initiate a merger between two Indian startup behemoths- Snapdeal and Flipkart in an effort to take on Amazon, which has pledged to spend $5 billion to become the country’s dominant internet retailer, according to the latest news report by Financial Times. Three out of the four major stakeholders- SoftBank group corporation, early backers Kaalari Capital and Nexus Venture Partners, and promoters Kunal Bahl and Rohit Bansal- who control six of the seven seats on the company’s board will need to approve the merger between Snapdeal and Flipkart, according to shareholders’ agreements.

“SoftBank is keen to merge the two companies, but some of the minority shareholders are not happy with the valuation that is being talked about,” one of the people close to the negotiations said. SoftBank has been in talks with multiple parties including US investment group Tiger Global Management, the biggest investor in Flipkart, in an effort to secure a deal, people familiar with the discussions told FT.

Kunal Bahl and Rohit Bansal, Snapdeal’s founders, who would make millions in case they sell their own joint 6.5 per cent stake, sent across an email to staff on Sunday, saying that “our investors are driving discussions around the way forward” without going into detail, according to FT report. They added that their highest priority was to protect the company’s staff. Snapdeal, Flipkart and SoftBank declined to comment to FT.
Source: https://www.ft.com/content/ea144fda-1d21-11e7-a454-ab04428977f9