The Flipkart-Snapdeal merger talks are in their final stages and a confirmation may come as soon as May-end, sources privy to the details told CNBC-TV18. The deal has been held back by opposition of the Snapdeal investors to the buyout terms given so far.
Apart from SoftBank, which owns 30 percent of Snapdeal's stake, other investors in the e-tailer include names like Kalaari Capital and Nexus venture, which own 8 and 11 percent respectively.
Flipkart's management and Board is largely in favour of the deal. Flipkart and SoftBank prefer a share swap ratio of 1:10 in their favour. SoftBank also looks to hold at least 20 percent in the merged entity.
For this, SoftBank has also offered to buy out founders Kunal Bahl and Rohit Bansal's stake in Snapdeal for USD 50 million.
The founders, who according to sources have accepted this offer, only want assurance that the 2,500 employees of Snapdeal stay on after the merger.
Noida-based Paytm pulled out of talks to acquire Snapdeal last month on valuation issues, highly placed industry sources had told Moneycontrol. According to top sources, Paytm was not keen to consider a valuation of over USD 800 million to USD 1 billion for Snapdeal.
Snapdeal has raised close to USD 1.76 billion from investors such as Ontario Teachers Pension Fund, Softbank, Alibaba Group, Temasek and others. A low valuation would mean that late stage investors in the company could get a low or negative return on their investments.
Flipkart also recently raised a total of USD 1.4 billion in funding from investors Microsoft, eBay and Tencent. A merger would make eBay a common investor in both Flipkart and Snapdeal.
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