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SoftBank, Tokyo-based telecom and internet multinational, spent close to three hours on Tuesday convincing Nexus Venture Partners, an early-stage investor in e-commerce company Snapdeal, to drop its veto against what would be the biggest consolidation in the sector.
But the Snapdeal board meeting, which kept sector watchers hooked through the day, failed in its mission to get Nexus on board. Board members headed straight for lunch, without any sign of a deal with Flipkart.
Masayoshi Son-led SoftBank got veteran Kabir Misra, one of the seven members on Snapdeal board, to lead the talks. It wasn’t clear, however, if he flew down from his Silicon Valley office or attended the board meeting via video-conferencing. But even Misra, president and CEO of SoftBank China and India Holdings, could not persuade Nexus to agree on the proposed terms for selling Snapdeal to its rival Flipkart at the board meeting.
SoftBank, the largest investor in Snapdeal, has been trying to stitch an M&A transaction between Kunal Bahl-led company and e-commerce leader Flipkart for some months now. The Snapdeal board meeting, held at a plush hotel in the national capital region on Tuesday, was meant to get a go-ahead for the proposed deal.
Without a nod from Nexus, SoftBank cannot go for its planned merger of Snapdeal with Flipkart. The Bengaluru-based e-commerce firm, founded by Sachin Bansal and Binny Bansal, is slated to have its board meeting later this week, and Snapdeal would indeed be discussed there, an executive in the know said.
Naren Gupta, co-founder of Nexus, has been the man holding up the deal unless his company got a payout of at least $80 million, sources said. Gupta did not budge from his stand even after a three-hour long board meeting.
Snapdeal founders Kunal Bahl and Rohit Bansal, Kalaari Capital (another early-stage investor) co-founder Vani Kola, independent director Akhil Gupta (who’s vice-chairman Bharti Enterprises), were all present during the proceeding. The latest addition to the Snapdeal board, Lydia Bly Jett of SoftBank Group International, joined the meeting via tele-conferencing, it is learnt.
Sources said Nexus was playing hardball and was not ready to give up so soon even as SoftBank did not agree on the payout amount that Nexus demanded. Kalaari Capital had also vetoed the sale earlier, but agreed to SoftBank’s terms recently.
“It is purely a commercial fight. Nexus has made it clear that they want a bigger payout on a better valuation. Tuesday’s board meeting was all about convincing Nexus to change its stance from a nay to aye,’’ said a source close to the board. Nexus did not respond to an e-mail sent to the company.
Sources added that till now there’s been no common term sheet on the table.
For SoftBank, making Nexus agree today was important as after the board’s go ahead, it was supposed to take the deal to the Flipkart board this week, sources said. The date of the next Snapdeal board meeting has still not been decided.
SoftBank currently owns 33 per cent in Snapdeal, while Nexus has roughly a 10 per cent stake and Kalaari holds eight per cent in the company, according to documents filed with the Registrar of Companies.
Sources said that founders Bahl and Bansal want around $40 million each at a valuation of close to $2 billion, even as SoftBank is trying to pin the deal at $1 billion or less. SoftBank’s peak valuation, last year, was around $6.5 billion.
