After the mega Walmart-Flipkart deal last year, India’s booming e-commerce landscape is gearing up for another acquisition. The buzz is that Gurugram-based Snapdeal, reportedly the fourth-largest player in the business, is close to finalizing talks to acquire its nearest rival ShopClues and has already started the due diligence process.
The all-stock deal, expected to be pegged around $200-250 million, will give an exit to ShopClues’ investors, including Singapore’s sovereign wealth fund GIC, Helion Venture Partners, Tiger Global, Nexus Venture Partners and Unilazer Ventures. Sources in the know told The Economic Times that the deal was likely to see the above investors get one Snapdeal share for every nine they hold if the merger went through as planned, and would give them a 10% stake in the combined entity.
This development comes at a time Snapdeal has charted an impressive turnaround from its existential crisis in 2017, back when it was embroiled in protracted and ultimately unsuccessful merger talks with Flipkart. As the startup’s CEO and co-founder Kunal Bahl stated in a LinkedIn post last year, “This was an M&A process that had dragged on for more than half a year while not Associate in Nursing finish visible , with many discords outstanding, while at the same time, the business was losing money and cash reserves were depleting fast.
We were reaching to fall off a formation if a decision wasn’t taken like a shot to still build the business.”
The board’s decision to stick it out as an independent company, but with a reshaped business model, christened Snapdeal 2.0, paid off. The company has managed to bring down its consolidated loss by a whopping 87%, from Rs 4,647.1 crore in FY17 to Rs 613 crore in the following fiscal. Snapdeal turned cash flow positive in June 2018. It has also been steadily increasing its order numbers, now in the 2.5 lakh per day range from a low of 30,000-40,000 daily during its crisis phase. However, it still can’t hold a candle to the biggies in the business – Amazon and Flipkart typically rack up 6 lakh orders daily.
The deal, if it goes through, can facilitate the 2 corporations contend along additional sharply against giants together with Walmart-owned Flipkart and Amazon within the Indian market.
Written by Zezom.com News Staff.