Snapdeal, in a press statement, is “categorically denying” the possibility of a merger with Flipkart or Paytm. Mint had earlier reported today, that sources have confirmed Snapdeal’s possible acquisition talks, and that it is being sold at somewhere between $1.5-$1.8Bn, a number lower than even the total cash infusion it has received till date.[mks_pullquote align=”left” width=”300″ size=”24″ bg_color=”#dd3333″ txt_color=”#ffffff”]The price being offered for Snapdeal is between $1.5 billion and $1.8 billion.[/mks_pullquote]
In a statement, Snapdeal says,
Snapdeal categorically denies having had any such discussion. The information is incorrect and without basis. We are making decisive progress in our journey towards profitability and all our efforts are aligned in this direction.
The startup has so far raised over $2 billion in funding, majority of which comes from SoftBank — $900 million. Mint had reported that SoftBank is leading the sales talk on behalf of Snapdeal. However, the talks are still at initial state and to keep the company running, it is expected to pump in additional $50 million as a bridge round.
According people aware of this acquisition deal development, the price being offered for Snapdeal is between $1.5 billion and $1.8 billion. In 2016, at a time of raising funding round, the company was valued at around $6.5 billion. [mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#dd3333″ txt_color=”#ffffff”]The online commerce sector in India has room for only two or three large e-commerce companies in the long run.[/mks_pullquote]
Sale talks with Paytm’s E-Commerce division — which has backing from Alibaba — are more advanced than with Flipkart. While Flipkart was also struggling to raise additional funding since last year, it managed to raise $1 billion, and is also planning to raise another billion. However, it is highly unlikely that the company will spend a major portion of that money on acquiring an already struggling unit.
However, if this does happen, it could be the biggest-ever acquisition deal in the Indian start-up ecosystem. It has been largely believed, that the online commerce sector in India has room for only two or three large e-commerce companies in the long run. Looking at how things are panning out for Amazon, it already has booked one of those slots.
While the news of Snapdeal sale is certainly new, it is not surprising at all. The company is going through its hardest time so far. The cash-crush situation has come to an extent that it has decided to move out of its office space in a city to a co-working space. The company recently laid-off more than 600 employees, slashed discounts and minimized marketing spend.
Things are looking bad in its payments platform entity — Freecharge as well. Nine months post acquisition, its CEO Govind Rajan quit, and the company had to appoint its go-to-man for everything, Jason Kothari as CEO. The company has also committed to invest additional $20 million in the company, amid ties when there’s a potential sale for the company, on cards.