Snapdeal-Flipkart Merger Reaches Final Stages; Companies Sign Letter Of Intent

Snapdeal-Flipkart Merger Reaches Final Stages; Companies Sign Letter Of Intent

The FlipkartSnapdeal merger seems to be heading towards its final stages now. As per the latest media reports, the falling Indian ecommerce giant, Snapdeal has agreed to sign a non-binding Letter of Intent (LoI) for a merger with fellow competitor, Flipkart.

As per Investopedia, a letter of intent (LOI) outlines the terms of a deal and serves as an “agreement to agree” between two parties, in most major deals. It further formalises a preliminary agreement before negotiations begin, and outlines what can and can’t be talked about outside of that negotiation. It provides a roadmap that describes how things will proceed.

This development further clears out the air of uncertainty that has surrounded the deal, because the LoI establishes a preliminary agreement between the two parties.

Commenting on the same, a source close to the development told Moneycontrol, “The due diligence will start next week with some Flipkart executives coming to (Snapdeal’s) office and warehouses. All the stakeholders have now given their nod to the deal.”

An email sent to both Flipkart and Snapdeal did not elicit a response at the time of publication.

Snapdeal-Flipkart Deal: A Timeline

Snapdeal currently has a seven member Board, where Softbank holds two seats, and Kalaari Capital, Nexus Ventures, Rohit Bansal, Kunal Bahl (the founders), Akhil Gupta hold the rest.

When SoftBank proposed the merger between Snapdeal and Flipkart, it initially faced opposition from the ecommerce marketplace’s other backers including Kalaari Capital and Nexus Venture Partners, where the latter two asked for $100 Mn each from the proposed sale.

Till date, SoftBank has invested about $900 Mn in the company and has a 33% stake. Kalaari and Nexus hold 8% and 10% stakes respectively, and the founders, Kunal Bahl and Rohit Bansal have a meagre 6.5% stake in the company.

After SoftBank gave the final go-ahead to the proposed merger, the deal hit a roadblock, when Nexus Venture Partners refused to settle on the valuation. Following that, it was reported that the deal was in its final stages, as Nexus came onboard with the sale of Snapdeal.

Amidst all this, just yesterday it was reported that SoftBank Global reported $1.4 Bn loss on two major investments in India, Snapdeal and Ola.

These are volatile times for the ecommerce space in India. The three frontrunners, namely Flipkart, Amazon, and Paytm are leaving no stone unturned to capture their share of the multibillion pie that Indian ecommerce is. In April 2017, Flipkart raised $1.4 Bn funding at a valuation of $11.6 Bn and further acquired eBay India operations. Just last month, it was reported that Amazon  invested in nine dedicated Fulfilment Centres (FCs) and 33 Delivery Stations exclusively for furniture and large appliances. On the other hand, Paytm loaded its war chest with $200 Mn from Alibaba for its ecommerce entity Paytm Mall.

Step up your startup journey with BHASKAR! From resources to networking, BHASKAR connects Indian innovators with everything they need to succeed. Join today to access a platform built for innovation, growth, and community.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
UNLOCK 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
UNLOCK 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

Snapdeal-Flipkart Merger Reaches Final Stages; Companies Sign Letter Of Intent-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

Snapdeal-Flipkart Merger Reaches Final Stages; Companies Sign Letter Of Intent-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

Snapdeal-Flipkart Merger Reaches Final Stages; Companies Sign Letter Of Intent-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

Snapdeal-Flipkart Merger Reaches Final Stages; Companies Sign Letter Of Intent-Inc42 Media
Snapdeal-Flipkart Merger Reaches Final Stages; Companies Sign Letter Of Intent-Inc42 Media
You’re in Good company