Snapdeal staff may be richer by Rs 193 crore if Flipkart takes over the firmSnapdeal, one of India’s largest online e-commerce portals, may offer a Rs 193 crore bonanza to its staff if the firm is taken over by its larger rival Flipkart.
Snapdeal, one of India’s largest online e-commerce portals, may offer a Rs 193 crore bonanza to its staff if the firm is taken over by its larger rival Flipkart.
Quoting its sources, a PTI report said that if the deal goes through, the founders will give half of their payout (Around Rs 193 crore ) for the proposed scheme which would cover all current employees of Snapdeal.
Snapdeal has about 1,500-2,000 staffers.
“The founders have asked the Board to carve out $30 million (about Rs 193 crore) from their settlement for payouts to the Snapdeal team. They want to ensure that the team does not get sidelined in any manner,” they added.
Some former senior executives of Snapdeal, who have left the firm in the past 12 months, could also benefit from the process.
E-mails sent to Snapdeal did not elicit any response.
The intent is also to compensate for the ESOPs that were issued to senior employees.
The value of their shares and options have eroded and would be worthless once the deal is signed, one of them said.
Interestingly, the deal-linked payment would also be extended to employees who do not own ESOPs to reward those staying on with Snapdeal till the proposed transaction with Flipkart is complete.
If the deal goes through, Snapdeal founders will get $60 million (cumulative), of which half will be given to employees.
Japanese conglomerate and Snapdeal’s largest investor SoftBank has initiated the process to sell the beleaguered online marketplace to bigger rival Flipkart.
It has managed to get Board members, which also includes the founders (Kunal Bahl and Rohit Bansal) and early investors Kalaari and Nexus Venture Partners, to agree to the potential deal.
Nexus Venture Partners could get close to $80 million and a stake in the merged or new entity, while Kalaari could get about $70-80 million.
According to regulatory filings, SoftBank currently owns over 30 per cent in Snapdeal, while Nexus has roughly a 10 per cent stake and Kalaari holds 8 per cent share in the firm.
A non-binding term sheet to start the due diligence by Flipkart for Snapdeal is expected to be signed soon between the two parties.
In the past few months, Snapdeal has seen a number of voluntary and involuntary exits. While the company has hiked salaries by up to 15 per cent, employees are concerned about their future as the impending takeover looms ahead.
One of the leading contenders in the Indian e-commerce space, Snapdeal has seen its fortunes failing amid strong competition from US-based Amazon and Flipkart.
SoftBank had recently said it suffered a loss of $1 billion (Rs 6,500 crore) on its investment in Snapdeal during 2016-17, almost matching the money it put in the home-grown marketplace.
The deal between Snapdeal and Flipkart, if completed, would mark the biggest acquisition in the Indian e-commerce space and change the landscape of the sector that is witnessing intense competition among players.
(With PTI inputs)