Bengaluru: The board of online marketplace Snapdeal (run by Jasper Infotech Pvt. Ltd) has given the go-ahead to the company to continue negotiations to sell itself to Flipkart, which increased its buyout offer to $850 million last week, three people familiar with the matter said.

The development implies that Snapdeal’s largest investor SoftBank Group Corp. may have won the boardroom battle against two other investors, Nexus Venture Partners and Kalaari Capital, as well as Snapdeal founders Kunal Bahl and Rohit Bansal, both of whom wanted to sell the company to Infibeam Inc. or stay independent.

Snapdeal and Flipkart will start negotiations on Monday to finalize a sale and purchase agreement (SPA), the people cited above said.

An SPA is a contract that will bind the two companies to conclude the deal.

Snapdeal will then call a shareholders’ meeting to get the deal approved by all of them, the people said. It has more than 25 institutional shareholders as well as dozens of individual part-owners.

SoftBank has already reached out to smaller shareholders in Snapdeal to seek their approval on the current terms of the deal, one of the three people said.

On 18 July, Mint reported that Flipkart sent a revised buyout offer of roughly $850 million to Snapdeal. On 24 July, Mint reported that the board of Snapdeal was divided about the company’s proposed sale, as founders Bahl and Bansal were pushing for a sale to Infibeam or getting Snapdeal to survive as an independent company by cutting both a majority of jobs and the size of the business.

Spokespersons for Snapdeal, SoftBank and Flipkart declined to comment.

As part of the all-stock offer of $850 million, Flipkart has offered to pay $650-700 million in stock immediately and another $150 million at a later date. Flipkart’s offer includes Snapdeal’s marketplace business and software provider Unicommerce. The company is also likely to include its logistics unit Vulcan Express in the sale, said the people cited above.

Separately, lender Axis Bank Ltd is nearing a deal to buy Snapdeal’s digital payments platform Freecharge for Rs350-400 crore in cash, Mint reported on Wednesday.

If the sale of Snapdeal to Flipkart is completed, it will be the biggest ever in India’s start-up ecosystem, concluding months of back-and-forth between the two companies.

SoftBank is also expected to invest fresh capital in Flipkart and provide a partial exit to Flipkart’s largest shareholder Tiger Global Management.

The proposed sale highlights the dip in fortunes of a start-up that was once India’s second-most valuable internet company, hitting a peak valuation of $6.5 billion last year. Since the start of 2016, Snapdeal, which has raised nearly $2 billion in cash, has been hit by a cash crunch. A company that was seen as serious challenger to Flipkart and Amazon India quickly became an also-ran in India’s e-commerce market. It later cut thousands of jobs, witnessed the departure of a a slew of top and middle managers and was crippled by a bitter boardroom battle.

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