Snapdeal staff may hit Rs193 crore jackpot
A big windfall is awaiting Snapdeal employees. If the e-commerce major’s merger with bigger rival Flipkart goes as per the script, then 1,500-2,000 staffers of Snapdeal will have a Rs 193 crore bonanza. Even some former employees could benefit.
Last week, Snapdeal investors, including Nexus Venture Partners, have come an understanding to sign a non-binding agreement with Flipkart for merger. As per the agreement reached, Snapdeal promoters Kunal Bahl and Rohit Bansal would take home $30 million (about Rs 193 crore) each in cash in lieu of their entire 6.5 per cent stake.

The founders have asked the Snapdeal board to carve out about Rs 193 crore from their settlement for payouts to the Snapdeal team as they want to ensure that the team does not get sidelined in any manner.
Some former senior executives of Snapdeal, who have left the firm in the last 12 months, could also benefit from the process, provided the board agrees to it. The founders want to compensate for the ESOPs issued to senior employees. The value of their shares and options has eroded and would be inconsequential once the deal is signed. 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.
The Snapdeal-Flipkart merger deal comes at a time when investors have been raising concerns over profitability in e-retail and ever-increasing competition in the sector. Interestingly, it makes India’s e-commerce space a playground for a clash between SoftBank Group’s Masayoshi Son and Jeff Bezos, Amazon founder.
Softbank, the biggest investor in Snapdeal, has been brokering the merger deal for some time now as it started witnessing losses on its investments in Snapdeal for the past few quarters. Softbank has invested around $1 billion in Snapdeal in multiple rounds and holds close to 34 per cent stake in the company.
The merger has been necessitated by quick and steep falling in Snapdeals valuation, which was around $6.5 billion in one of the funding rounds. It has plummeted to $1 billion closer to the merger deal talks. According to sources, Softbank will be investing around $1.5 billion to get a double-digit stake in the merged entity.
Tags: