Indian ecommerce giant Flipkart‘s new termsheet for the acquisition of rival ecommerce firm Snapdeal holds Snapdeals investors liable for any wrongdoing in the firm. Moneycontrol reported the Snapdeal board has decided, due to inside resistance, to let all the 2 dozen stakeholders take a final call on whether to accept Flipkart’s offer.
According to sources close to the deal, the revised termsheet contains various clauses and holdbacks which imposes legal liability on the board members and values the company at around $ 80 million. According to this clause, the stakeholders will remain liable to whatever happens to Snapdeal for at least 18 to 24 months, post the merger.
The company board has decided to let all the stakeholders take a call on the acquisition following resistance from the Cofounders of Snapdeal Kunal Bahl and Rohit Bansal. An other clause in the revised termsheet also says that Flipkart will hold back about $ 150 – $ 200 million of the proposed payment, till after the merged entity is convinced there is no trouble brewing due to the merger.
Premji Invest, Foxonn, Tencent, Blackrock and Ontario Teacher’s Pension Fund are some of Snapdeal’s 25 to 28 stakeholders who will make the final decision. Moneycontrol quoted one of their sources saying, “ The discussion to allow all the stakeholders to have a say on the issue had been going on since the last few days. It came to light after the minority stakeholders started questioning the payouts promised to the majority stakeholders.”
In the past month, the private investment arm of the Wipro Chairman, Azim Premji, Premji Invests objected to the special payouts to select stakeholders including the two Snapdeal founders. The cofounders have also been pushing for alternative paths and were reportedly in talks with Infibeam for a potential acquisition. They have also been conducting one on one meetings with senior executives including heads of multiple business units hinting their reluctance to go ahead with a deal with Flipkart.
This is the second revised termsheet for the all stock acquisition sent by Flipkart. The first offer, which valued Snapdeal at $ 550 million, was rejected by Snapdeal board. The second offer for $ 850 million was sent last week.
