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Flipkart signs a binding term-sheet to acquire long time rival Snapdeal – Report

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Flipkart is scheduled to undertake commercial and financial diligence of  Snapdeal soon

Country’s largest e-commerce firm Flipkart has signed a binding term-sheet to acquire Snapdeal, operated by Jasper Infotech Pvt. Ltd.The term-sheet, which was signed over the last few days, nominally values SoftBank-backed Snapdeal at around $1 billion.

Flipkart will undertake commercial and financial diligence soon. It will quote a final price after it completes a rigorous examination of Snapdeal’s books, which is expected to take 6-8 weeks.

Japanese investor SoftBank owns 33 per cent of Snapdeal. Kalaari Capital and Nexus Venture Partners, among the largest investors in the e-tailer with 8% and 10% ownership, respectively.Chief executive officer Kunal Bahl and chief operating officer Rohit Bansal, who are also co-founders, together own less than 6.5 per cent of the company.

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The personal investment arm of Wipro Chairman Azim Premji holds around 2% in the company, has formally reached out to the company’s board asking for greater clarity on the proposed sale to Flipkart, as well as on the rights of the minority stakeholders.

Snapdeal has more than 20 stakeholders which includes Ontario Teachers’ Pension Plan, eBay, Foxconn Technology Group, Alibaba Group, the world’s largest asset manager BlackRock, Tata Sons Chairman Emeritus Ratan Tata, and hedge funds Tybourne Capital and Myriad Asset Management.

Reportedly, Snapdeal founders Kunal Bahl and Rohit Bansal have been offered $15 million each, with an additional $30 million for the entire management team and employees at Snapdeal. Also SoftBank had proposed to hand out $60 million to Nexus and about $30 million to Kalaari.

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