SoftBank is backing the Snapdeal – Flipkart merger which could be the biggest merger or acquisition deal in the Indian e-commerce sector. Last month idea-Vodafone go for the biggest merger in the telecom sector.
Softbank is the biggest investor in the Snapdeal which holds around 30% in Snapdeal.
The Japanese telecom and internet group is likely to invest up to $1.5bn in the merged entity by picking up primary and secondary shares, giving it around 15% in the Flipkart- Snapdeal combine.
Flipkart has seen ups and down this year. After facing low valuation from its existing investors, Flipkart gains momentum after raising fresh investments recently.
Flipkart or Snapdeal are yet to comment on possible merger. Last time when we published ” Snapdeal Said to be in deal talks with rivals Flipkart and Paytm for potential Sale .” Snapdeal refuted such claims.
The deal may include a $1bn share sale by Flipkart’s largest investor, New York-based Tiger Global, along with an infusion of fresh equity by SoftBank. Tiger is expected to sell 10% of its approximately 30% stake in Flipkart. If this secondary deal goes through, it would probably ensure that Tiger recoups the entire capital it has plowed into Flipkart, and still leave it with a stake of about 20% in the company according to ET.
SoftBank is learned to have drawn up three options for Snapdeal-merge with Flipkart, combine with Alibaba-led Paytm or a write-down of SoftBank’s investment to zero.
“SoftBank and Flipkart have agreed on the broad contours of the deal. If these terms stay on track, it’s likely that the talks will culminate into a definitive transaction by late April,” a person familiar with the talks said. The discussions, which have been on since February, have picked up in the past fortnight with SoftBank founder Masayoshi Son getting directly involved.