Flipkart, Snapdeal to sign biggest ecommerce merger deal next week

Violet Tucker
May 13, 2017

Advancing a step close to Snapdeal-Flipkart merger deal, Japan-based telecom and Internent giant SoftBank has got the nod from its co-investor Nexus Venture Partners (NVP) for sale of Snapdeal to India's largest e-commerce firm Flipkart. But things may change now, said analysts. "This situation caused a material decrease in net asset value of Starfish I Pte Ltd as of March 31, 2017, and therefore SBG impaired the carrying amount of its shares in the company, to the amount equivalent to its net asset value", the company noted. Snapdeal's largest stakeholder, SoftBank, is now negotia ting the sale of the compa ny to ri val firm Flipkart. The move comes just as the portal's parent company is likely to get merged with its rival e-commerce site, Flipkart.

If completed, the deal would mark the rise of the country's own representative in India's ecommerce battlefield, which features deep-pocketed rivals Amazon and Alibaba.

Top three investors Softbak, Nexus and Kalaari Capital in Snapdeal had in past failed to arrive at a consensus on proposal to sale Flipkart owing to certain differences that surfaced after the proposal was first mooted.

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SoftBank, the largest shareholder in Snapdeal, had earlier secured the go-ahead from the founders and another investor, Kalaari, but the matter was stuck as Nexus was not in agreement with the valuation suggested, which according to sources has now been resolved. So far, SoftBank has invested over $1 billion in Indian consumer Internet segment. SoftBank had written down $555 million (approximately Rs 3,692 crore) in Jasper Infotech and ANI Technologies - the two parent companies of Snapdeal and Ola, respectively - for the six months that ended in September 30 a year ago, reported Moneycontrol.

Valued at $6 billion mid of a year ago, the company has been going through very challenging times since the last 8-10 months as it could not raise funds. The losses compare with a gain of $1 billion (¥114.377 billion) in 2015-2016. Ola, on the other hand, recently raised about $250 million from SoftBank at a $3 billion valuation, down from the $4.5 billion it was valued at in its previous financing round. The loss resulted mainly from a fall in the fair value of financial instruments at FVTPL from March 2016 to March 2017.

Besides Ola and Snapdeal, SoftBank has investments in OYO Rooms, messaging app Hike Messenger and on-demand grocery delivery platform Grofers. SoftBank had invested in real estate start-up Housing.com, too.

Other reports by Guamnewswatch

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