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Due to the surmounting pressure on parent Snapdeal, it looks like the two digital wallets that were once arch enemies are finally joining hands. Citing sources aware of the developments, a report from ET suggests that Paytm has signed a non-exclusive agreement to acquire rival payments major FreeCharge from flailing e-commerce marketplace Snapdeal in an all-cash deal.

The rumored value of this transaction is said to be way lower than one could’ve expected. Earlier, the reports had suggested that SoftBank was pushing for the consolidation of the digital wallet platform owned by Snapdeal for as high as $150 million.

But, sources privy to the situation now suggest that the company’s value has been slashed by as much as 80 percent as compared to the massive $450 million value Snapdeal acquired it for. If the deal is completed, FreeCharge will be sold to Paytm for somewhere between $45 to $90 million — a shocking fall for the once growing digital wallet giant.

Another four sources further go on to add that Paytm has already signed the agreement and is expected to begin the financial and commercial due diligence for the transaction next week. This falls in line with a recent report, which suggested that SoftBank’s board has given ‘in-principle approval‘ for the sale of both Snapdeal and FreeCharge in the coming days. Adding to the glum state of FreeCharge, one of the sources says,

The FreeCharge deal could be closer to $45 million.

This is not the first time we are hearing about the potential sale of Snapdeal-owned FreeCharge. Earlier, the mobile payments portal had held discussions with global payment majors like PayPal, but those talks did not materialize. The company hasn’t able to attract investors for a funding round for a long time and Snapdeal parent Jasper Infotech has been pouring money into the venture to keep the ship afloat.

As previous reports suggested, Paytm was looking for exclusivity with the FreeCharge transaction and it seems to have gotten exactly that — as mentioned in the reports. This clause will see FreeCharge become the sole payment method on e-commerce platforms such as Snapdeal and Flipkart, if the latter’s acquisition deal also materializes.

Recently, it has become quite necessary for FreeCharge to scout a buyer for their payments business. It has not only been witnessing surmounting losses but has also been plagued with problems of management exodus. It parted ways with CEO Govind Rajan a couple weeks ago. He has been replaced with Snapdeal’s recent hire — former CEO Jason Kothari. He has now been appointed as the CEO of FreeCharge and chief strategist of Snapdeal.

While the Paytm-FreeCharge seems another step closer to materialization, SoftBank is more worried and focused with the merger of Snapdeal with Flipkart. It has not only been able to secure fresh capital due to an internal strife among its early and largest investors but also failed to witness growth. Thus, Snapdeal has trimmed its workforce by over 600 employees, cleared out massive offices, and the co-founders have given up their compensations.

SoftBank has initiated talks, which SoftBank’s board has approved, with Flipkart to acquire Snapdeal’s business at a valuation much lower than one can actually imagine. It is being said that the said transaction is a done deal (for about $950 million), where Kalaari is on board, SoftBank has already initiated buyback process from co-founders and is looking to pick a chunk of Flipkart shares from Tiger Global.

In addition, this transaction, if completed, will make Paytm the crowned champion of the digital payments ecosystem in India. This Alibaba-backed Noida-based company is not hitting the brakes just yet. Instead, it is looking to raise an additional $1.2-1.5 billion in cash from the Japanese telecom giant SoftBank. This transaction has been in the works for nearly three months and will see Paytm’s valuation balloon to $7 to $9 billion, according to people aware of the matter.

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