Since e-commerce firm Snapdeal accepted Flipkart's revised offer of Rs 5,800 crore ($900-950 million) on Wednesday, July 26, all eyes have been on its stakeholders for an approval of the same. Now, it has been reported that Tata group Chairman Emeritus Ratan Tata, BlackRock, Temasek and Foxconn have given Snapdeal in-principle approval to merge with Flipkart.
For the deal to go through, 75 percent of the minority stakeholders have to give their nod. The above-mentioned stakeholders have approved the merger, but about 30 more stakeholders are yet to give their approval. The 30 stakeholders include names such as Softbank, Alibaba, eBay, IndoUS Ventures, Kalaari Capital, and Singapore-based Brother Fortune Apparel.
While neither Snapdeal nor its stakeholders have revealed any detail regarding the deal, a source close to the Snapdeal board told the Business Standard: "Flipkart wants all the shareholders to agree to the deal. If that does not happen, then it might decide to not go ahead."
Between all the discussions and negotiations, Premji Invest has been vocal about its displeasure over the sale of Snapdeal to Flipkart. In a letter to the Snapdeal board of directors, Premji Invest had made it evident that Snapdeal's decision to pay $30 million to the co-founders and $60 million to early investors Kalaari Capital and Nexus Venture Partners had not gone down well with it.
Not just Premji Invest, Snapdeal's co-founders Kunal Bahl and Rohit Bansal too have been urging the online marketplace to instead strike a deal with Infibeam or go with a plan B, which was said to be ready. Under it, the firm planned to lessen its manpower and cut back on its operations until it finds a new buyer.
"The board might look at other buyers or finally give the go-ahead to Snapdeal's plan. The company might sell its sister concerns such as the logistics arm Vulcan Express and FreeCharge, run some of the operations and work towards an exit. It all depends on Flipkart's next move," the website had earlier quoted a source.
Meanwhile, it is also being said that Flipkart's revised term sheet has numerous clauses that may have become a bone of contention between the two parties. One of the clauses says that the Snapdeal board and stakeholders will remain liable for all that happens in the online marketplace even after it is sold to its competitor for about 18-24 months, reported Money Control. Additionally, Flipkart plans to pay a part of the deal amount immediately in stock and about Rs 963 crore ($150 million) after 12-24 months.