Reports are that, after a long haul of three months, with more than 15 meetings, and a payout of at least $210 Million, it’s finally clear that Snapdeal and Flipkart merger is finalised at $1 Billion valuations.
A non-binding term sheet is expected to be signed over the next 48-72 hours, after which Flipkart will begin the financial and commercial due diligence of Snapdeal and the complete acquisition is expected to take two-three months.
As per the merger, Nexus Venture Partners is speculated to receive $100 Mn along with a stake in the new entity. Kalaari Capital is expected to get around $70 Mn-$80 Mn, while the Snapdeal founders will get $30 Mn each post their exit from the company.
According to inside people, Flipkart’s offer is a non-binding one and a formal term sheet will be signed over the next few days, with the due diligence process expected to commence by next week.
Interestingly, it appears that except for few top executives, others are not likely to be retained in the combined entity. In February, Snapdeal went through a mass retrenchment exercise, which saw over 2,300 employees being let go. There is no clarity on whether or not the existing or former employees with vested ESOPs in the company would be entitled to any benefit through this deal. Around 2,500-3,000 employees hold close to 5-6 percent stake in Snapdeal in terms of ESOPs.
Apart from this deal, online payments firm Paytm is in talks to buy Snapdeal-owned payments firm Freecharge in a fire sale. The company has offered to pay $40-50 million for buying Freecharge in an all-cash deal. Read more about Indian Startup Ecosystem.