Snapdeal’s largest investor SoftBank is keen on merging the e-commerce company with its rival Flipkart, according to The Times of India. This it will be the largest consolidation in the domestic e-tail market if the deal goes through.
The Japanese investor is also considering a tie-up with Paytm or a writedown of its investment to zero. SoftBank will likely invest up to $1.5 billion (around Rs 9,000 crore) for 15% stake in the merged entity. Currently, the Japanese firm has over 30% stake in Snapdeal. Flipkart’s largest investor, Tiger Global, may sell shares worth $1 billion (approximately Rs 6,000 crore) and give up its 10% stake in the e-commerce giant, the TOI report said.
Talks of the merger have been doing the rounds since February, and a definitive transaction is likely next month. “SoftBank and Flipkart have agreed on the broad contours of the deal. If these terms stay on track, it is likely that the talks will culminate into a definitive transaction by late April,” an official familiar with the negotiations told The Times of India.
While Snapdeal stressed that it has no intention of selling the company, Flipkart executives told the newspaper that these were “false and baseless” speculations.
Founded in 2010, Snapdeal has been plagued with multiple problems lately. Last month, company founders Kunal Bahl and Rohit Bansal had said they will take a 100% salary cut in an attempt to increase profits. Officials had also said that around 600 employees will be laid off across Snapdeal, logistics firm Vulcan and digital payments company Freecharge as part of the drive. The company had reported a loss of Rs 29.6 billion in the last financial year, reported Business Today.