Investment bank Credit Suisse, which is advising Snapdeal on its proposed sale to larger rival Flipkart, is reportedly reaching out to minority shareholders of the beleaguered e-commerce firm to build a consensus on deal. According to a Press Trust of India report citing sources, Credit Suisse is reaching out to smaller shareholders to get them on board for the acquisition. The development comes close on the heels of one of the minority investors
PremijiInvest writing to Snapdeal for the second time for clarity on the terms of the deal. Other minority investors in cash-strapped Snapdeal include Ontario Teachers’ Pension Plan, Ratan Tata, Foxconn, Temasek and BlackRock.
According to recent reports, PremjiInvest has objected to special payments to certain shareholders including its two co-founders- Kunal Bahl and Rohit Bansal- and two early backers, Nexus Venture Partners and Kalaari Capital. It has been reported that, under the terms of the proposed deal, Nexus and Kalaari, who also have board seats, could get $60 million in addition to their new equity in Flipkart, while the two founders would get a combined $30 million.
PremjiInvest in its letter said that while it was okay with $30 million in special payments proposed by the Snapdeal board for its employees, it had reservations over the $60 million payout to the early investors. Snapdeal’s largest investor, Japan-based SoftBank, has been trying to gather consensus among the investors over the deal for the past few months. It has managed to get the board members to agree to the said sale and a term sheet for due diligence with Flipkart has been signed.
The objections raised by the smaller investors have the potential to hurt the talks for the deal, as Flipkart has reportedly earlier told Snapdeal that it wants all the investors to agree to deal terms as a precondition of the transaction.
The proposed deal is likely to reduce Snapdeal’s valuation to about $1 billion from $6.5 billion, with existing shareholders getting a proportionately reduced stake in the combined business, or cash.
SoftBank has already written off over $1 billion on valuation of its investment in Snapdeal.
PremijiInvest writing to Snapdeal for the second time for clarity on the terms of the deal. Other minority investors in cash-strapped Snapdeal include Ontario Teachers’ Pension Plan, Ratan Tata, Foxconn, Temasek and BlackRock.
According to recent reports, PremjiInvest has objected to special payments to certain shareholders including its two co-founders- Kunal Bahl and Rohit Bansal- and two early backers, Nexus Venture Partners and Kalaari Capital. It has been reported that, under the terms of the proposed deal, Nexus and Kalaari, who also have board seats, could get $60 million in addition to their new equity in Flipkart, while the two founders would get a combined $30 million.
PremjiInvest in its letter said that while it was okay with $30 million in special payments proposed by the Snapdeal board for its employees, it had reservations over the $60 million payout to the early investors. Snapdeal’s largest investor, Japan-based SoftBank, has been trying to gather consensus among the investors over the deal for the past few months. It has managed to get the board members to agree to the said sale and a term sheet for due diligence with Flipkart has been signed.
The objections raised by the smaller investors have the potential to hurt the talks for the deal, as Flipkart has reportedly earlier told Snapdeal that it wants all the investors to agree to deal terms as a precondition of the transaction.
The proposed deal is likely to reduce Snapdeal’s valuation to about $1 billion from $6.5 billion, with existing shareholders getting a proportionately reduced stake in the combined business, or cash.
SoftBank has already written off over $1 billion on valuation of its investment in Snapdeal.
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