A private security gurad stands at a gate of Snapdeal headquarters in Gurugram on the outskirts of New Delhi, India, April 3, 2017. Picture taken April 3. REUTERS/Adnan Abidi - RTX33YCH
Even as Snapdeal’s main investor Softbank has gone ahead to align with its arch rival Flipkart, former and current employees of the Gurgaon company have written a joint letter to co-founders, Kunal Bahl and Rohit Bansal, alleging that they did not let the merger go through for ‘personal motives.’
In a letter dated August 3rd, reviewed by Moneycontrol, the employees allege that the Plan B or Snapdeal 2.0 plan is not viable and would only keep the founders in-charge at the cost of a large number of employees.
"An independent inquiry into the affairs of this company would reveal how the interests of employees and possibly shareholders were destroyed to protect the interest of two people," the letter reads.
Snapdeal has responded to the allegations in the letter. "The board has made no decision with regard to the team composition for Snapdeal 2.0. The company cannot comment on baseless, unsubstantiated allegations made by unidentified sources," said a Snapdeal Spokesperson.
Sources close to the recent developments at Snapdeal told Moneycontrol that it was the disagreement between the entire set of two dozen odd stakeholders that led to termination of merger talks. "Founders cannot be squarely blamed as they had only agreed to the possibility of a merger and a subsequent due diligence early on," said a source close to the merger talks.
Also read: SoftBank-Saudi fund buys into Flipkart, deal seen at $2.5 billion
Among those copied on the letter seen by Moneycontrol are the Prime Minister’s Office, Ministry of Finance and Governor of the Reserve Bank of India.
"We saw a proud unicorn change into a troubled company. But we kept the faith and believed what you said - the employees of this organisation are your ''single biggest priority," the letter reads.
The letter has also been marked to the managing director of Axis Bank, among at least a dozen other recipients. Last month, Axis Bank announced the acquisition of Snapdeal's mobile wallet firm Freecharge in an all cash deal for Rs 385 crore.
(An employee is seen at the front desk of Snapdeal headquarters in Gurugram on the outskirts of New Delhi, India, April 3, 2017. REUTERS/Adnan Abidi.)
"As we exchanged notes with our colleagues in technology, HR, CX, finance, business, category teams etc, more and more of us realised that Plan B is not viable," the letter by employees alleges.
"Now that you have killed the deal to save your skin, it is a time that you are made aware of the voice of thousands," the letter says.
Source close to the developments at Snapdeal refuted allegations made in letter. "The allegations that founders benefit is incorrect because they directly lose USD 30 million. In fact the fact is that the deal was exceptionally onerous to execute," the source said.
The differential payments offered to select stakeholders had apparently irked smaller stakeholders, which led to a stalemate.
According to reports, in June the family office of Azim Premji, objected to special payments to select shareholders including the company's founders.
"In a sense, differential payment was wrong to begin with, that thing remained unresolved till the end," the source said.
This played a crucial role especially at a time when Flipkart demanded 100 percent stakeholder approval on the deal.
The letter also questions the co-founders decision making with respect to some of the acquisitions and initiatives including the acquisition of logistics firm GoJavas.
In the letter, the employees seem to be unhappy about the 2.0 plan. "It is a poisonous plan to destroy the organisation so that you stay in charge. So many people to be impacted for the sake of just two of you," the letter reads.
Must Read: Mood at Snapdeal’s office a day after it terminated sale to Flipkart
According to the letter, the entire episode at Snapdeal has impacted around 40,000 people including Snapdeal's employees and their dependents.
"These are real people, not statistics. They are from different functions and they know what you have done," the letter says.
However, Moneycontrol cannot vouch for any of the allegations made in the letter.
Putting an end to all merger discussions, Snapdeal last week announced that it plans to go solo instead of being acquired by its arch rival Flipkart.
Even though key stakeholder, Softbank said that it supported the company in this decision and will “look forward to the results of the Snapdeal 2.0 strategy”, early investor Kalaari had criticised the move publicly.
Nexus Venture Partners has also supported the founder’s new plan. “Nexus, as a long term Snapdeal shareholder, fully supports the Snapdeal 2.0 journey. We will continue to partner with the company to help achieve its goals,” the investment firm said in an emailed statement.
Clearly, the employees stand on the losing edge as they could have benefitted from Softbank’s new investment of USD 2.5 billion in Flipkart, had the merger gone through.
As per the 2.0 plan, Snapdeal is expected to lay-off about 600 people which could make it a leaner organisation.
While the letter appears to be a vent for the disgruntled employees, Moneycontrol couldn't independently verify the number of employees that were involved in conceptualising the letter.
(This story has been updated.)