- Meenakshi Kumar |
Snapdeal’s proposed sale to Flipkart was called off yesterday as the founders and shareholders of the struggling online marketplace did not agree to the terms of the deal. Snapdeal is now pushing ahead with a plan to survive as an independent entity that will involve the company reducing a majority of its 1,400-plus workforce and dramatically cutting the size of its business. A Snapdeal spokesperson said in a statement, "Snapdeal has been exploring strategic options over the last several months. The company has now decided to pursue an independent path and is terminating all strategic discussions as a result,".
Snapdeal co-founders Kunal Bahl (CEO) and Rohit Bansal were against the sale to direct competitor Flipkart from the start and would still prefer to keep Snapdeal independent. After SoftBank, Nexus and Kalaari are the largest investors in Snapdeal, which has more than 25 institutional shareholders and were supposed to get higher payouts relative to other shareholders as part of the deal.
SoftBank wants Flipkart to change the structure of the sale. According to the current structure, the deal would impose tax liabilities on SoftBank which it finds unacceptable. Snapdeal is also scouting for a buyer for its logistics unit Vulcan Express. The company reportedly wants to sell it for Rs 100-120 crores. Possibly Bahl and Bansal are delaying the sale of its core e-commerce operation because they want to close the other deals first. Additionally, it needs to build consensus within its shareholders, some of whom have opposed the $90 million payout Snapdeal’s initial investors are likely to get if the Flipkart acquisition happens. The much-delayed marriage will also be the biggest transaction in the e-commerce space in the country.