Snapdeal weighs sale to Flipkart, but company board not convinced on terms of deal
SoftBank has been looking to push other investors such as Kalaari Capital and Nexus Venture Partners to get their approvals, but wasn't successful in convincing them
The board of e-commerce major Snapdeal is believed to have discussed a possible sale of the company at a meeting on Tuesday wherein its Japanese investor Softbank also appointed its second director in the e-tailer. While the company did not disclose the details of the meeting, sources said the board met to discuss the proposal for sale of the company, among other issues.
When asked if the board discussed/finalised matters related to stake sale and fresh fund raising, a Snapdeal spokesperson said: "There are no decisions in this regard".
SoftBank is the largest shareholder in Snapdeal. There have been reports that the Japanese investor is pushing for sale of the struggling e-tailer to bigger rival Flipkart.
Contrary to the stake sale talk, another media report suggests that SoftBank's plans to sell the online marketplace firm to Flipkart may not fructify in the near term following its inability to convince the board of directors of Jasper Infotech which owns Snapdeal.
According to a report in Business Standard, the board of directors, including Kunal Bahl and Rohit Bansal, failed to reach a consensus over the terms of the deal.
Further, SoftBank has been looking to push other investors such as Kalaari Capital and Nexus Venture Partners to get their approvals, but wasn't successful in convincing them.
The New Delhi-based e-tailer company, which competes with US-based Amazon and Tiger Global-backed Flipkart, has been looking at raising fresh funds to tide over its cash crunch. Over the last few months, it has trimmed its workforce significantly and has shut down non-core businesses.
SoftBank had first led a $627 million financing round in Snapdeal in 2014. Early investors -- Nexus Venture Partners and Kalaari Capital -- hold one seat each on the company board. According to reports, these two have been at loggerheads with Softbank on Snapdeal's valuation.
While SoftBank remains the largest stakeholder in Snapdeal with an ownership of 33 percent, Kalaari Capital and Nexus Venture Partners hold about 8 percent and 10 percent respectively in the company founded by Kunal Bahl and Rohit Bansal.
A report in The Economic Times shows that the terms of the deal proposed by SoftBank towards the sale of the online marketplace firm to Flipkart will allow Snapdeal shareholders to get one share of Flipkart for over ten shares held in the company.
The board meeting on Tuesday signals easing of tensions among Snapdeal's early investors, Kalaari Capital and Nexus Venture Partners, and it's largest backer Softbank, the ET report said.
Meanwhile, SoftBank has strengthened its position on the board of the country's third largest online marketplace by appointing Lydia Bly Jett as additional director.
As per the filings made to the Registrar of Companies, Jett has been appointed as additional director on the board of Jasper Infotech, which owns and operates online marketplace Snapdeal.
She is the second executive from Softbank to be appointed on the Snapdeal's board after Kabir Misra, who was brought in last month.
Both, Misra and Jetts appointments come after the resignation of Jonathan Bullock, chief operating officer at SoftBank, from the board of Snapdeal in February this year.
Snapdeal's seven-member board includes representation from investors SoftBank, Kalaari Capital and Nexus Venture Partners, as well as co-founders Kunal Bahl and Rohit Bansal. Bharti Enterprises vice-chairman Akhil Gupta is an independent director on its board.
With PTI inputs
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