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A few days back, we reported how finally after 3 months-long deliberations that included more than 15 board meetings and a giant payout of at least $210 million, the Flipkart-Snapdeal merger was finally happening. But, now comes the news that there is still one bump in the road. According to people familiar with the deal, the merger still requires a go-ahead from two of India’s most powerful businessmen magnets, Ratan Tata and Azim Premji.

The merger, which is being deemed as India’s biggest consolidation in the e-commerce sector, took a long time to materialise initially mainly because of Snapdeal’s early-stage investor Nexus Venture Partners (NVP) not being happy with the payout being offered by the Tokyo-headquartered telecom and internet giant SoftBank.

The final deal has ended up valuing Snapdeal at around $1 billion, which is a major fall from its $6.5 billion last year, which was the e-commerce firm’s peak valuation in its short lived lifespan of seven years. Though the founders, Kunal Bahl and Rohit Bansal and the early-stage investors Kalaari Capital and Nexus Venture Partners have reached a non-binding preliminary agreement wit SoftBank, but that still requires due diligence to be completed in a few weeks.

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According to sources close to Snapdeal, the company still has a huge task of getting some of its important investors to agree to sign the papers of the deal. This includes the family offices of Ratan Tata’s Tata Group and Azim Premji’s Wipro Ltd. It’s still not clear if this could act as a major hurdle in the closing of the deal.

According to people familiar with the deal, if the process of duel diligence goes as planned, a term sheet specifying stock and cash for each Snapdeal shareholder will be furnished with the final agreement getting signed by by mid- to late June this year.

According to the terms specified in the preliminary pact, Snapdeal’s two founders Kunal Bahl and Rohit Bansal, who hold approximately 6.5 per cent together in the company, can be expected to get richer by a whopping $60 million when the merger comes through. Though, they might not be given any stake in the merged entity. Nexus has reportedly been given around $80 million for its single-digit stake in Snapdeal, with the exit amount to be provided in a combination of cash and stock in the Flipkart-Snapdeal merged company. Kalaari Capital, on the other hand, is expected to get around $70 million in exit money.

The merged entity is expected to give a major push to the current cut throat competition going on between Jeff Bezos’ Amazon and India’s very own homegrown e-commerce leader, Flipkart. Reportedly, Bezos’ has recently decided to spend a whopping amount of $5 billion in India to gain significant share as the e-commerce market surges in the Indian subcontinent.

According to Masayoshi Son, SoftBank founder, the deal will prove to be a win-win situation for both homegrown e-commerce players. Sources inform that the Son, whose company owns about a third of Snapdeal parent Jasper Infotech Pvt. Ltd. could contribute that equity to the merged entity and infuse another $500 million to $1 billion in Flipkart through a transaction with Flipkart backer Tiger Global Management. The amount will give Flipkart more fuel to battle it out with Amazon.

According to a report in the livemint, not all small investors in Snapdeal are happy with the proposed Flipkart acquisition and some are said to be even dragging their feet. No one knows as of now if this could end up being a deal breaker for the final leg of Flipkart-Snapdeal merger.

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