The sellers fear that if the deal is materialised, they may meet the same fate as sellers on AskMeBazar.com, which shut operations last year without settling dues

The imminent merger between Snapdeal and Flipkart could hit a roadblock with an online seller group seeking government intervention to stop the two companies from proceeding with the deal, until the former settles payment dues of sellers on its platform. 

In a letter to Nirmala Sitharaman, Minister of State for Commerce and Industry, All India Online Vendors Association (AIOVA), a group of 2,000 sellers, also added if the deal is materialised, they may meet the same fate as sellers on e-commerce marketplace AskMeBazar, which shut operations in August last year without settling dues.

Also Read: Meet the VC: Rahul Khanna of Trifecta Capital says India still suffers from a trust deficit

“Today, we write to you in reference of Jasper Infotech (parent of Snapdeal), another e-commerce marketplace which is on the verge of shutting down or merging with another company due to lack of funds,. We would like to inform you via this email that more than 500 sellers have complained to us regarding unsettled financial matters with the current management of Snapdeal. We had compiled and submitted a small list to the management of Snapdeal informally in March (2017). However, they never acted on the same. Our members are already riling with the losses faced in AskMeBazaar. Now they feel they will face loss in Snapdeal under the new management,” reads the letter.

“We also believe that such marketplaces are pseudo private companies and should be treated at par with public companies, as public at large is interested in these companies. We therefore request you to hold the winding down/sale/merger of above mentioned company subject to approval by 75 per cent of sellers doing active business on the platform,” the letter says.

Meanwhile, a Bloomberg report said the Flipkart-Snapdeal merger needs backing from the family offices of Azim Premji, the billionaire chairman of tech services giant Wipro, and Ratan Tata, the former chairman of the salt-to-software conglomerate Tata Group. Both are investors in Snapdeal. While Snapdeal’s largest investor SoftBank has managed to persuade Kalaari Capital and Nexus Venture Partners to agree to terms, the new hurdle could further delay the deal, according to the report.

Last Friday, e27 exclusively reported that struggling Indian e-commerce company Snapdeal is one step closer to signing a “distress sale” deal with Flipkart, with the former receiving terms sheet. The due diligence has started, and SoftBank-backed Snapdeal has already sent the records (skill-set and job descriptions) of its key employees which it wants to retain post-acquisition to Flipkart. The potential deal size is pegged at US$1 billion — a considerable drop from Snapdeal’s peak valuation of US$6.5 billion at the time of raising funding early last year.

Also Read: Paytm in talks to raise up to US$2B from SoftBank; looking to buy FreeCharge from Snapdeal

Snapdeal co-founders Rohit Bansal and Kunal Bahl will not join the combined entity post the deal, a person with direct knowledge of the matter shared with e27. “All investors of Snapdeal are now on board with the decision, and their differences have been sorted out. As part of the deal, SoftBank is likely to inject up to US$1 billion in the combined entity. That said, it could still take months before the deal is sealed,” said the person.

—

Want to be part of the ecosystem?

Register for your Echelon Asia Summit access pass now! Enjoy additional 10% discount on Echelon Asia Summit Startup, Investor and Corporate passes just for being our favourite 27 reader: e27.co/echelon/asia/register/?code=EMPOWER10

  

The post Online sellers seek government intervention to stop Snapdeal-Flipkart merger over unsettled dues appeared first on e27.