Flipkart makes informal $1-bn offer for Snapdeal

India’s largest online marketplace Flipkart has made an informal offer to buy struggling smaller rival Snapdeal for $1 billion in an allstock deal, amid persistent differences between Snapdeal’s largest investor SoftBank Group and two other key shareholders.

Even though SoftBank, Nexus Venture Partners and Kalaari Capital are yet to resolve their conflict, the latest round of talks has pushed them closer to a deal, three people aware of the discussions said, requesting anonymity as the talks are confidential.

Flipkart’s offer is a non-binding one and a formal term sheet will be signed over the next few days, with the due diligence process expected to commence by next week, the people cited above said.

While the board of Delhibased Jasper Infotech Pvt Ltd, which runs Snapdeal, has not reached any consensus on the exit payouts to Nexus and Kalaari, they have mutually given the go-ahead for the deal to be signed and taken through due diligence.

Flipkart and Snapdeal did not immediately respond to requests for comment.

On May 3, first reported that the board of directors of Jasper Infotech moved a step closer to agreeing to a distress sale to Flipkart, with SoftBank finally convincing Snapdeal co-founders Kunal Bahl and Rohit Bansal, Nexus and Kalaari to agree to sell the company.

Last month, Flipkart offered $1 billion in stock to buy Snapdeal (excluding Freecharge). It is expected to make another offer once the differences at Snapdeal’s board are resolved. Snapdeal, which has raised nearly $2 billion in cash, hit a peak valuation of $6.5 billion in February 2016 when it received $50 million from investors.

Kalaari and Nexus are feuding over their exit payouts from SoftBank, the people mentioned above said. SoftBank has proposed to hand out $60 million to Nexus and about $30 million to Kalaari. Snapdeal founders Bahl and Bansal have been offered $15 million each, with an extra $30 million for the Snapdeal management team and employees.