Snapdeal-Flipkart merger nearing as Softbank gets Nexus nod for sale

Snapdeal-Flipkart merger nearing as Softbank gets Nexus nod for sale

SoftBank had written down $555 million (approximately Rs 3,692 crore) in Jasper Infotech and ANI Technologies - the two parent companies of Snapdeal and Ola, respectively - for the six months that ended in September 30 previous year, reported Moneycontrol.

SoftBank has also written off over Dollars 1 billion on valuation of its investment in Snapdeal. Even if sold at the upper end of the range, it will be a steep fall in valuation for the company, which had seen layoffs of about 100 employees across the board, and for which its founders, till late a year ago, had demanded a valuation of close to $1billion. A non-binding term sheet means that at the end of the due diligence, Snapdeal Board as well as Flipkart can walk away from the deal without any obligations. Softbank is the largest investor in Snapdeal which want to make every effort to bring the investors like "Nexus" for selling Snapdeal.

"The (FreeCharge) deal could be closer to $45 million", the Economic Times quoted a source privy to the development as saying in a report on Thursday. However, there is no official confirmation if Flipkart and digital payments provider MobiKwik are still running to acquire FreeCharge.

"Highly competitive e-commerce market in India has made a trend of the company's business performance lower than initially anticipated".

SoftBank is keen to sell Snapdeal to Flipkart in order to cut its losses on an investment that has not worked well.

SoftBank, which has committed investments of $10 billion in India, has been working on a plan to sell Snapdeal to larger rival Flipkart.

More news: AG Josh Shapiro issues multiple charges against engineer in 2015 Amtrak crash

SoftBank is going all out to make the merger a reality this week.

Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. At its peak, Snapdeal was valued at around $6.5 billion, but at the current deal table, lead investors want to settle the transaction at no more than $1 billion.

Paytm's deal to acquire Freecharge puts other contenders such as Mobiqwik out of the fray.

The Snapdeal founders Bahl and Bansal have gone directly to employees with a string of townhall meetings, promising profit and brushing off takeover talk.

The deal between Snapdeal and Flipkart, if completed, would mark the biggest acquisition in the Indian e-commerce space and change the landscape of the sector that is witnessing intense competition among players.

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