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Flipkart Takeover May Leave Snapdeal’s Employees Richer By Rs 193 Crore

With the Flipkart and Snapdeal merger on the verge of completion, reports suggest that Snapdeal will offer its staff a $30 million (Rs 193 crore) bonanza upon the completion of the deal

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With the Flipkart and Snapdeal merger on the verge of completion, reports suggest that Snapdeal will offer its staff a $30 million (Rs. 193 crore) bonanza upon the completion of the deal.

This news came out 3 days after Snapdeal agreed to sign a non-binding Letter of Intent (LoI) for a merger with the fellow competitor, Flipkart. "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," PTI said in a statement.

Snapdeal currently has around 1500 to 2000 people working for them, who will all benefit from the merger of the two companies. If the merger does go through, Snapdeal founders will get $60 million (combined), of which half will be given to employees.

The main motive of this mega pay-day would be to cover up for the loss in the value of ESOP’s (employee stock ownership plan) that employees at Snapdeal would have to face. ESOP’s are used to provide incentives to employees, as it offers them a hold in a company’s market share. Thus, the employees are rewarded once the stock price of the company increases.

With the merger of the two companies, the Snapdeal stock would lose all its value, thus leaving top employs with shares in the company with nothing except their salaries.

Japanese company and Snapdeal's largest investor SoftBank initiated the process to sell Snapdeal to bigger rival Flipkart.

It managed to get Board members and early investors Kalaari and Nexus Venture Partners, to agree to the potential merger. Nexus Venture Partners could get close to $80 million and a stake in the merged/new entity, while Kalaari could get about $70-80 million from the final deal.

The deal between Snapdeal and Flipkart, if completed, would mark the biggest takeover in the Indian E-commerce sector which is witnessing the intense competition between national and international players like Amazon and Alibaba sponsored PayTM.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Shaurya Bhaskar

Shaurya is a young journalist

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