1. Snapdeal’s sale to Flipkart yet to get approval of Ratan Tata and Azim Premji: Report

Snapdeal’s sale to Flipkart yet to get approval of Ratan Tata and Azim Premji: Report

It seemed as if Softbank had cleared all hurdles in selling Snapdeal to Flipkart. However, it looks as if a spanner has been thrown into the wheel, as approval from two of India’s most powerful businessmen —Azim Premji and Ratan Tata— is yet to come.

By: | Published: May 16, 2017 7:26 PM
Snapdeal is yet to get approval from its minority shareholders on its sale to Flipkart, ET Now has reported.

Just as it seemed that Softbank had cleared all hurdles in selling e-commerce major Snapdeal to the market leader Flipkart, it looks as if a spanner has been thrown into the wheel, as approval from two of India’s most powerful businessmen— Azim Premji and Ratan Tata— is yet to come. Snapdeal is yet to get approval from its minority shareholders on its sale to Flipkart, ET Now has reported.

Yesterday, media reported that Kalaari Capital had agreed to sell their 8% stake in Snapdeal to Softbank in an all-cash deal. Media also reported that Vani Kola, MD of Bengaluru-based Kalaari Capital had resigned from the board of Snapdeal. Last week, investor Nexus Ventures had reportedly agreed to take a $80 million payout in return for its equity holding in Snapdeal, clearing a major hurdle for Softbank to sell Snapdeal in favour of buying into Flipkart.

Softbank has been pushing hard for Snapdeal’s sale to Flipkart, in a desperate effort to switch its holding in the struggling e-commerce major with that in other robust firms. Softbank’s investment value in Snapdeal has steadily fallen over the last one year, after it invested $627 million in the Indian firm at a value of $1.8 billion in October 2014.

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Snapdeal, in which Japan’s Softbank is the single largest investor, has seen its valuation plummet from the peak of $6.5 billion as recently as one year ago in February 2016. Softbank is reportedly seeking a valuation of just $1 billion for selling Snapdeal now. This leaves Softbank with just about $333 million on its one-third equity stake held in Snapdeal. Earlier too, the Japanese conglomerate had recorded losses on its investments in Snapdeal in February this year and in November last year.

The rapid decline in Snapdeal’s valuation, with no recovery in sight, seems to have prompted Softbank to cut its losses and exit the investment while there is still time, in favour of buying into a larger player in the industry with a stronger foothold, and perhaps, better growth prospects in an increasingly competitive market.

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