The mega-merger of Flipkart, Snapdeal that has been brewing in the e-commerce sector has inched yet another step towards fruition. Kritika Saxena of CNBC-TV18 learns from sources that Snapdeal and Flipkart will complete their due diligence soon.
We had reported earlier that the two companies had signed a non-binding term-sheet. Now, we understand that in June they are going to sign the final term-sheet and that is when the merger process will start. It could take about 3 months for the entire process to be completed.
In the first phase of the process SoftBank will be investing to buyout the current investors, it has already bought out the founders as well as Kalaari Capital stake but Nexus Venture Partners (NVP) stake is left. That would be USD 500 million investment.
They would also be investing to buyout a 10 percent stake of Tiger Global's stake and in addition, they will be investing a fresh amount. So, net-net, SoftBank will be putting in almost USD 1.5 billion.
As far as the board of the merged entity is concerned, since Tiger Global will be divesting a portion of their stake, SoftBank will have almost 19-20 percent stake. So they will have to now expand the board and incorporate Softbank executives (two board members are likely to be incorporated)
However, since Tiger Global will have an almost equal amount of stake, they will have a right of first refusal (RoFR) for any future strategic decisions that have to be taken by the board.
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