Snapdeal’s board gives approval for Flipkart’s $950 million acquisition offer

Jasper Infotech’s board, the parent company of beleaguered ecommerce major Snapdeal, has approved Flipkart’s bid of $900 million-$950 million clearing another road block for the merger of two domestic ecommerce behemoths. The board also considered a $700 million share-swap offer by listed e-commerce firm Infibeam but rejected it as too low. The deal comes after Flipkart’s early offer of $850 million was rejected by the board owing to low valuations. However, Snapdeal’s board still requires in-principle approval from its bigger investor Azim Premji. He had objected to special payments to certain shareholders including its two co-founders and two early backers.

The bone of contention is the differential payments, which are an attempt to win over larger Snapdeal investors and the founders who have to agree to a vastly lowered valuation. Under the proposed terms, early investors, like Kalaari Capital and Nexus Venture Partners, would receive $60 million in addition to their new equity in Flipkart, while founders, Kunal Bahl and Rohit Bansal, would get a combined $30 million.

The domestic ecommerce industry is on a cusp of a bitter rivalry after Amazon’s onslaught. The global ecommerce major is expected to invest more than $2 billion into the Indian unit in a bid to outclass the domestic frontrunner Flipkart.