The Snapdeal-Flipkart merger, initiated by Japanese telecom and internet conglomerate SoftBank, which is also Snapdeal’s largest investor, might head into rough weather as the company’s board members continue to have differences on matters of valuation.

“Snapdeal has been pushed in a particular direction, which is not our choice,” one of the board members told FactorDaily.

“There is not a single call, forget a meeting, between the management of Flipkart and Snapdeal on the integration of the two companies.” The board member requested to anonymity since deal negotiations are still on.

Snapdeal’s board consists of two members from SoftBank, its largest investor, one each from Nexus and Kalaari Capital, Bahl, Bansal, and telecom veteran Akhil Gupta who is the vice-chairman of Bharti Enterprises, which controls phone services firm Bharti Airtel.

Also read: Death of a Unicorn: Inside the fall of Snapdeal, once a $6.5 bn startup

Term sheets were exchanged only a couple of weeks ago between the two companies. SoftBank is nearing completion of due diligence of Flipkart in the next couple of weeks, according to a source close to the company, who, too, wanted to stay anonymous.

The “deal can go either way”, this source said, as the board members are not on the same page “over valuation”.

In a Snapdeal board meeting early this month, Nexus Venture Partners, which made its first investment in the company in January 2011, did not agree with the terms and conditions of the merger, leaving the deal in a limbo. Without Nexus’s consent, the deal can’t go through. There were reports earlier that the VC firm had agreed to the merger.

Flipkart (with SoftBank’s help) has made a $1 billion offer to acquire Snapdeal in a deal that is structured almost only in stock, barring paying some cash to founders Kunal Bahl and Rohit Bansal for an exit.

Differences between shareholders surfaced when Vani Kola, managing director of Kalaari resigned from the Snapdeal board. Other Snapdeal shareholders, about 20-25 of them, apart from the ones mentioned above, hold a significant share on Snapdeal — about 40%. These include industrialist Ratan Tata’s investment company, Intel Capital, Bessemer Venture Partners, BlackRock, among others.

Also read: The winners and losers in Snapdeal’s $950 million sale to Flipkart

“The non-Nexus, non-Kalaari shareholders might object to the deal,” said the source quoted earlier. “Though there has not been any official communication, but the other shareholders have not got a deal as sweet as Kalaari and Nexus, who used their board position to negotiate a better deal than the current valuation offered for Snapdeal.”

The objection will come once the Flipkart shares the final agreement after the due diligence on both sides is over.

The other shareholders, to be sure, do not have a right to vote against the merger, but have a voice and are already questioning the current valuation of Snapdeal in the deal.

The source used the example of Infibeam, an ecommerce and internet services company, to explain the disappointment among the investors. With a much smaller customer base and business momentum, Infibeam is valued at $1 billion. Snapdeal should be valued much higher, the source reasoned.

If the deal hits a roadblock, not only is the future of Snapdeal uncertain, it will also affect SoftBank’s plans to make good its losses in India by merging Flipkart and Snapdeal to take on rival Amazon.

Indian ecommerce, estimated to be $14.5 billion without counting train and flight ticket bookings, is projected to rise to $80 billion to $100 billion by 2020.

Also read: The backstory of how Snapdeal pivoted and pivoted — and then lost the plot

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