After a long haul of blame and dragging each other into courts, once called friends in the Indian startup ecosystem Oyo and Zo Rooms’ case may get settled soon.
After looking into the matter, the Supreme Court has finally decided to appoint former Chief Justice of India–Justice AM Ahmadi, as the sole arbitrator, who will deliver the final decision on the failed merger case.
The arbitrator has a maximum of 12 months to reach a conclusion.
The decision comes after seven months when both had filed a case against each other. While the SoftBank-backed company filed a criminal complaint against the founders of Zostel, alleging breach of trust, cheating, and misinterpretation of data, the Tiger Global-backed company lodged a ‘misconceived and baseless’ arbitration petition in the Gurugram Court.
Zo alleged that Oyo had acquired its data of employees, assets, hotel properties under the pretext of accelerating the process of acquisition but didn’t pay the due amount for acquisition.
The court declined to pass an order on the petition on the ground of jurisdiction, which forced Zo to knock Hight Court and finally the Supreme Court’s door.
The matter cropped up in 2015 when Oyo was reportedly in talks to acquire rival Zo Rooms. Later in 2016, media reports confirmed the acquisition after Softbank mentioned Zo Rooms acquisition by its portfolio company in its annual filing in December 2015.
According to the term sheet, the preference shareholders of Zo Rooms would get a 7 per cent stake in the combined entity, including preferred stock and equity shares, reports ET.
Legal experts further outlined that there is no guarantee that even if the arbitrator decides in favour of Zo Rooms, the deal is unlikely to be calculated on the basis of OYO’s current valuation.
As per Oyo’s current valuation which is about $5 billion, a 7 per cent equity in Oyo would amount to about $350 million.