In what looks like a closure to the ongoing talks with Flipkart, Snapdeal has chose to not merge with India's largest online retailer and instead pursue an "independent path".
As per media reports, Snapdeal's representative firms, J Sagar Associates, and Credit Suisse were supposed to meet their Flipkart counterparts, Khaitan & Co and Goldman Sachs, to close the merger deal in the ensuing meeting. We have a new and compelling direction - Snapdeal 2.0 - that uniquely furthers this vision, and have made significant progress towards the ability to execute this by achieving a gross profit this month.
".we respect the decision to pursue an independent strategy".
"The company has now made a decision to pursue an independent path and is terminating all strategic discussions as a result", the company said in a statement. The sale of Snapdeal would have seen SoftBank making an equity infusion in Tiger Global-backed Flipkart after the completion of the deal. There is no clause which stops the Japanese internet group from backing Snapdeal's rival Flipkart but it may raise concerns about its credibility as an investor if it does take that step, we had reported last week. Moreover, Snapdeal's early-stage investors have been upset with the way SoftBank has marked the valuation to a sixth of what it was past year. Reports suggest that Bahl and co-founder Rohit Bansal to convince the Snapdeal Board to go for an alternate plan, have been rallying efforts, instead of selling the company to Flipkart.
Snapdeal expects that the proceeds from the sale of FreeCharge to Axis Bank amounting to about $60 million will keep the company afloat for the time being, until it secures a fresh round of investment from new or existing investors. As part of the deal, Kalaari was expected to get a payout of about $30 million and Nexus about the double of that. It's not clear if this deal is still on, two of the three people said. Some of SoftBank's other investments in India include budget hotel aggregator Oyo and ride hailing company Ola.
Reuters has previously reported that the founders' bid to keep Snapdeal independent is likely to result in layoffs at the company, which now employs about 1,200 people.
Snapdeal, run by Jasper Infotech Pvt.
The much-awaited ecommerce deal between Flipkart and Snapdeal has been officially called off. Snapdeal has about 1,200 employees. Under such circumstances, the jury is out on Snapdeal's chances of survival after it exhausts the proceeds of the FreeCharge sale.
As per sources, the founders are not said to be happy with how Softbank first asked them to rebrand, spend money on marketing, promising all along that more investments are on the way but then suddenly left them high and dry.