The ecommerce players have signed a non-binding term sheet for the merger, sources said.
The talks of merger between Flipkart and Snapdeal scaled another hurdle after Japanese investor SoftBank completed the buyout of Kalaari Capital’s stake in Snapdeal, sources privy to the developments told CNBC-TV18. They said that SoftBank has also completed the buyout of Snapdeal founder's stake.
The deal, which has been in works for last few months, was stuck due to disagreement among stakeholders over final settlement for the company's earliest investors namely Kalaari Capital and Nexus Venture Partners.
The e-commerce players have signed a non-binding term sheet for the merger, sources said. Flipkart and Snapdeal now expect to complete the merger in three months’ time.
Moneycontrol had earlier reported that Snapdeal has signed a non-binding letter of intent with Flipkart for a merger.
The merger is expected to take place through a share swap and SoftBank is likely to get upto two board seats in merged entity. Flipkart will retain 'Snapdeal' brand for the interim and the merged entity will fall under the 'Flipkart' brand, sources said.
Sources privy to the developments at the etailers told that the merger is valued at USD 950 million to USD 1 billion. Flipkart is likely to have given job assurance to Snapdeal employees when the merger realises, they told CNBC-TV18.
Commenting on the development, Manish Maheshwari, CEO, Network18 Digital, said that consolidation in the e-commerce industry is under way. Flipkart will now focus only on Amazon and Snapdeal in the upcoming Diwali season, he added, while referring to the sales and discounts that e-tailers offer during the festive season.Retail bigwig Kishore Biyani of Future Group termed the deal as “death of a company” than a merger. “Snapdeal-Flipkart deal shows that in this environment no-one will survive,” he added.