The intriguing story of a young company and a promising product

It was sometime in the last few months of 2014 when the chatter started.

It began with Tiger Global’s interest in Unicommerce. If you remember 2014 and Tiger Global, this should stick with you: Tiger was the big daddy in town then and if its head Lee Fixel said, ‘I want to put money into you’, nobody really said no. And Lee Fixel was interested in Unicommerce.

To invest almost $10 million. Talks went far. In November 2014, Inc42, the startup focused digital media outlet reported that Unicommerce had raised $10 million from Tiger Global. Even as all this was happening, news started trickling in that Snapdeal wasn’t happy with the deal. In fact, the company itself was interested in acquiring Unicommerce.

Snapdeal Acquiring Unicommerce

Just a month later, in December 2014, Mint reported that Snapdeal was in talks to acquire Unicommerce. If you are thinking, whatever happened to Tiger Global, well this is what The Economic Times said, back then: “Online order management and fulfillment platform Unicommerce is in talks with Snapdeal for a potential acquisition, according to multiple people familiar with the development.

Two of the sources told ET that Unicommerce returned an investment of $10 million (Rs 62 crore) from Tiger Global to pursue the potential acquisition bid from Snapdeal, one of India’s top three online marketplaces. An acquisition, if it happens, could value the company at up to $10 million, according to people privy to the talks.”

Ken could not independently verify the return or exchange of money.

What came to light though by studying the company’s books of accounts is this. April of 2015 was the time when Unicommerce’s books first mention an acquisition by Snapdeal. In a board meeting held on 10 March 2015, the Unicommerce board approved the merger of the company with Snapdeal. According to documents filed with the Registrar of Companies (RoC), the amalgamation scheme (a schedule to merge two companies shares) was put for approval at the Delhi High Court.

Two points are of note from the High Court order, dated 20 October 2015.

Firstly, Section 4.3 of the document.

“There is also an averment to the effect, in paragraph 14 of the application that, the directors of the transferor and the transferee company have no material interest in the matter except to the extent that Mr. Kunal Bahl and Mr. Rohit Bansal, who are the promoters of the transferee company are also shareholders of the transferor company. It is stated that both Mr. Kunal Bahl and Mr. Rohit Bansal, separately, hold equity shares to the extent of 4.41% in the transferor company.”

Larger Conflict Of Interest?

While the potential conflict of interest with Bahl and Bansal being on both sides of the table is declared, whither Nexus? If anything, Nexus had a much larger conflict of interest given that it owned ten times as many shares in Unicommerce as Bahl and Bansal did individually and, like them, was both a major shareholder and a director in Snapdeal too. Curiously, the declaration completely skips this material disclosure.

In fact, Nexus is not mentioned even once in the entire document that was submitted to the court. While it is moot if this was deliberate and/or malafide, most people would call this a major disclosure lapse.

Even more so, when you see it in conjunction with Section 4.5 in the same document relating to the consent of shareholders for the proposed amalgamation. This section breaks down the number of each class of shareholders who have consented to the merger. On the side of Unicommerce, it mentions that 1 out of 1 preference shareholder has consented (this one shareholder being Nexus of course) and on the other side, it mentions that 16 out of 35 preference shareholders in Snapdeal have given their consent.

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