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Flipkart-SnapdealMerger amp; Acquisition

Flipkart To Close Snapdeal Acquisition Deal By Next Week: Sources

The Flipkart-Snapdeal merger, which is being deemed as India's biggest consolidation in the e-commerce sector, might finally get closed by next week. According to a news report in Business Standard (BS), sources close to the deal have informed them that Flipkart has completed its due diligence and has found everything okay and clean, but the number one homegrown e-commerce market leader has still not come back with a final number for the Snapdeal acquisition.

In the last one month, Flipkart has invested time in combing through Snapdeal 's book in order to make sure that everything being told to them during the deal was legit.

With the time ticking, if the deal doesn't goes through in the next few days, the flailing Snapdeal's board would have no choice but to either extend the timeline on the acquisition or start from the scratch again by putting the ecommerce site on the For Sale window again.

According to BS's source, the exclusivity clause that the two parties had entered will end next week and if Flipkart fails to come back to Snapdeal with an acquisition number, then SoftBank and other Snapdeal investors will have to take a combined decision on whether to extend the timeline or it can be open season.

However, people close to the deal are certain that the situation would not come to this as the deal will be finalised in the next few days with an official announcement taking place in the next week.

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.

The Japan-based SoftBank board is trying to bring everyone on the same page regarding the Snapdeal sale. Investment bank Credit Suisse, the firm which is advising Snapdeal on the merger deal, is also trying to get all Snapdeal's small shareholders onboard for the deal.

To recall, a week back, PremjiInvest, the family investment arm of Wipro Ltd chairman Azim Premji, which is a small investor in Snapdeal, has sent a letter to the ecommerce site asking for clarity on how the rights of minority shareholders will be protected in the proposed deal (Read Here). It is important to be noted that PremjiInvest had demanded the clarification for the second time since the deal negotiations have been going through.

Not only is PremjiInvest seeking a clarification from Snapdeal on the rights of minority shareholders, but it is also reaching out to all the other minor investors in Snapdeal such as asset management company BlackRock and Singapore state investment firm Temasek to come together in unison and oppose any special payments being made to certain shareholders, including co-founders Kunal Bahl and Rohit Bansal and early backers Kalaari Capital and Nexus Venture once the deal concludes.

According to BS's sources, there are a lot of things in the tunnel being worked out around the big ecommerce merger. Reportedly, there are three separate sets of talks underway for the other firms under Snapdeal's parent Jasper Infotech brand. These firms are: Vulcan Express, FreeCharge and Unicommerce.

To recall, a month ago, we reported how after 3 months-long deliberations that included more than 15 board meetings and a giant payout of at least $210 million, the Japanese internet and telecom giant Softbank had finally made up its mind to merge its biggest Indian asset Snapdeal with India’s leading e-commerce giant Flipkart (Read Here).

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