In stark contrast to another report published this morning, Snapdeal may be seeing some light at the end of the tunnel. A report from Forbes India cites two people aware of its acquisition talks and clearly states that Snapdeal’s acquisition by larger homegrown e-tailer Flipkart is imminent. Now, that comes as a pleasant surprise, doesn’t it?
The report published earlier suggested that Snapdeal parent Jasper Infotech’s board members have not made a decision on the sale. It is the case even though the company’s largest investor SoftBank (holds 33% stake) is aggressively pushing for the amalgamation of the two businesses. But, there are certain forces standing in the way of their decision.
The Japanese giant is hell-bent on turning around the company’s current flailing operations but has continuously failed to convince other board members of the same. Reports have recently suggested that Snapdeal’s boardroom has turned into a battleground which has been witnessing clashes between two groups — SoftBank vs their early investors Kalaari Capital and Nexus Venture Partners. The former has tried to even push more capital investments into Snapdeal (twice) but the latter denied the same due to drop in valuation.
Also, Softbank has just bolstered its position on the board by sending out Lydia Jett to replace the former additional director on the board. It doesn’t want to lose ground due to the lack of a representative on the board. So, Snapdeal’s situation may seem completely dire at this point and the co-founders holding town hall meetings to talk about profitability is just an attempt to console themselves.
But, that is not exactly the case being presented by Forbes’ report. It suggests that New Delhi-based Jasper Infotech’s board members met to discuss the “broad contours” of the rumored transaction with Flipkart. And surprisingly, sources have dropped word on their private talks and they suggest that the board members are more in agreement of the deal than in opposition of the same. And today’s earlier report suggests that the company’s early investors are asking for about $100 million each from the sale.
With regards to the same, the source adds,
Snapdeal is sold out and an announcement is likely over the next few days. A board meeting was held in Snapdeal today and a final agreement is being worked out.
The sources cited in the report further continue to mention that the transaction would witness SoftBank being the main proponent. And this would result in the Japanese giant picking up a significant chunk of Flipkart’s stake from Tiger Global Management, who is the primary investor in the homegrown giant. Another source adds,
As things stand, they’re going with Flipkart. It’s only a matter of time, and whatever has to come out will be announced within the next two weeks.
Earlier, it was reported that Snapdeal is looking for a potential merger or sale with Flipkart or Paytm. The company has, however, “categorically denied” such reports. However, the discussions are moving ahead with Flipkart as the valuation offered by Alibaba-backed Paytm was much lower than what Flipkart offered.
Also, there is currently no word on the credibility of this report as it stands in contrast to several other reports, such as Snapdeal is aiming for profitability in 2018. Also, sources have suggested that the e-commerce giant is looking to go public in a couple of years. But, if Flipkart is picking up Snapdeal then these plans would be completely nixed as it would merge its operations into their own — similar to what it is doing with the reported acquisition of eBay India.
Yes, Flipkart is gunning for its fiercest competitor Amazon India. It has recently gained traction from several giants such as Microsoft (recently signed an Azure cloud partnership) and Wal-Mart being attracted to invest and double down against Amazon in the country. So, Flipkart will now have its own brand, Myntra, Jabong, Snapdeal and even Ebay India under its umbrella to take on its fiercest competitor. This battle should be interesting. What do you think? Comment your thoughts down below.
