In an interesting turn of events, the much hyped-up Snapdeal – Flipkart deal may most likely be called off as former’s co-founders and shareholders continue to disagree on terms and conditions of the sale proceedings. The report comes barely four days after Snapdeal’s management agreed to sell its e-commerce business to its Bengaluru based arch rival for nearly $900 million.
The sniff about the apparent problem became evident after a crucial meeting scheduled to take place on Monday & Tuesday was abruptly cancelled. The all-important meeting in Bengaluru was supposed to officially close the transaction, with Snapdeal and Flipkart’s representatives were likely to sort out some key legal issues and other hurdles.
Snapdeal Founder’s still opposed to the deal.
The main contention in the deal is Snapdeal founders Kunal Bahl and Rohit Bansal. Both the co-founders are still reportedly opposed to sell their e commerce business to Flipkart. People familiar with the matter claim that both still want Snapdeal to remain an independent entity, which will be smaller in size and boost very minimal workforce.
Some reports also claim that Bahl and Bansal are also opposed to the “indemnity clause” included in the proposed deal. As per this clause, the co-founders and other members of the board will be held accountable for certain financial matters once this deal goes through.
Other complicated problems attached to the deal.
It is not merely Snapdeal’s co-founders that are creating hurdles for the deal. The deal is facing equal opposition from firm’s minority stake holders. They have been up in arms against Japanese Investment giant Softbank, which is the principle investor in the Gurgaon based e-commerce company. The minority stake holders claim that Softbank has completely overlooked their concerns in the ongoing sale proceedings.
Interestingly, Softbank also has some problems with the current deal as it imposes tax liabilities on the company. Subsequently, the Japanese giant wants the structure of the deal to be changed.
The Snapdeal- Flipkart saga is playing out like a never ending saga. Last week, when reports emerged that Snapdeal’s management has agreed to sell its e-commerce business to Flipkart for $900 million, people thought that the saga has finally ended. But those reports turned out to be anti-climax and the saga still continues.