India: Snapdeal-Flipkart merger hits another roadblock

It was supposed to be the biggest merger in the Indian e-commerce sector, but it may not happen after all.

The buyout of e-retailer Snapdeal by rival firm Flipkart has hit an unexpected snag after the family office of billionaire Azim Premji, one of the early investors in Snapdeal, wrote to its board objecting to special payouts for the founders and two larger investors, Kalaari Capital and Nexus Venture Partners.

Bloomberg reported that the Wipro founder who is a small investor in Snapdeal told the board in a letter that the US$90 million to be handed to this select group of early Snapdeal shareholders and founders isn’t acceptable.

Another US$30 million in special payments proposed by the Snapdeal board for the employees, on the other hand, is okay.

The two companies struck a preliminary agreement last month but the talks have bogged down over how Snapdeal’s investors and employees will be compensated.

The disagreement imperils a deal that was meant to slow Amazon.com’s growth in India by combining to create a strong local competitor. Amazon Chief Executive Officer Jeff Bezos has pledged to spend US$5 billion in the country to gain share as the market surges.

Full Content: Bloomberg

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