After weeks of dilly-dallying, Snapdeal is said to have finally accepted rival Flipkart’s $900-950 million buyout offer. This comes shortly after reports emerged that Snapdeal founders were considering selling out to Infibeam so that they could retain control over the company. The board of Jasper Infotech, which owns Snapdeal, has gone ahead with Flipkart, according to Reuters. The deal is currently awaiting approval from Snapdeal’s shareholders. Also Read - Flipkart Flagship Fest sale: iQOO 3, Moto Razr, iPhone 11 and other deals to considerAlso Read - Redmi Watch teased on Flipkart ahead of next week’s India launch
Flipkart’s buyout includes Snapdeal’s online marketplace only. Its subsidiaries FreeCharge (payments firm), Vulcan Express (logistics arm), and Unicommerce (e-commerce solutions provider) are excluded. The deal is likely to be completed in three stages. First, SoftBank will buyout stake from Snapdeal’s other investors — Nexus Venture Partners and Kalaari Capital. Those funds would be infused into Flipkart, thereby making Softbank a minority investor in the company. And finally, Snapdeal’s marketplace would be merged with Flipkart. ALSO READ: Snapdeal keen on Infibeam buyout while Softbank pushes for Flipkart: Report Also Read - How to use find COVID-19 vaccine slot using Paytm app
For Flipkart, this acquisition comes at a time when its valuation has taken a significant hit. Currently, the Bengaluru-headquartered company is valued at $11.5 billion, down from peak valuation of $15 billion, but continues to be India’s most valuable e-commerce firm. With Snapdeal aboard, Flipkart should be able to widen the gap with Amazon that in just four years (since its launch in 2013) has emerged as the second-largest online retailer. The Snapdeal acquisition is Flipkart’s second-biggest since it bought out fashion retailer Myntra for $300 million in 2014.
Following the completion of the deal, which could take up to three months, SoftBank would hold about 20 percent in the Flipkart-Snapdeal combine. Earlier reports claimed that the Japanese investment giant had suffered losses in excess of $1 billion in Snapdeal. It was Softbank’s marquee investment in India, and the Mayoshi Son-owned company burnt its fingers. Now, Softbank owns a 20 percent stake in Flipkart rival (and the country’s second-most valuable e-commerce company) Paytm as well. ALSO READ: Paytm might be investing in BigBasket to take on Amazon in online grocery
For Snapdeal, this is a good deal despite the fact that it had to sell out for under $1 billion. For a company that was valued at $6.5 billion a little over a year ago, that is a bit of an embarrassment. However, with Amazon’s unihibited march, the meteoric rise of Paytm, the sleeper success of Shopclues, and of course, the numero uno status of Flipkart, Snapdeal would have receded it oblivion sooner or later. So, all’s well that ends well.