Finally, it’s confirmed. Snapdeal has acquired Freecharge. The rumours that have been around for couple of weeks now can be put to rest. Although, the financials of the deal have not been disclosed WSJ has quoted one person familiar with the deal stating that Freecharge acquisition cost Snapdeal in the region of $450 million through a mix of cash and equity.
Kunal Shah, Founder of Freecharge, just posted this picture earlier on his Facebook timeline announcing the marriage of Snapdeal and Freecharge.
Kunal Bahl, co-founder and CEO of Snapdeal said, “The deal will help Snapdeal “offer all our customers access to the widest selection of products and services online,”
If the size of the deal, pegged at USD 450 million, is true – it will be biggest deal in Indian consumer internet space, going beyond $330 million which Myntra had fetched when they got acquired by Flipkart.
Why Snapdeal Acquired Freecharge?
While Freecharge is a online recharge and couponing site, Snapdeal is a pureplay ecommerce marketplace, so what is the reason for FreeCharge acquisition?
Online recharge and eCommerce are cousins of each other in ecommerce world. FreeCharge’s subscriber base is probably the biggest reason why Snapdeal acquired Freecharge. Take for instance what Paytm is doing – they initially started at a online recharge portal, but added ecommerce marketplace to the platform once their subscriber base swelled. Given that demographics of people who do online recharges and people who make online purchases are nearly the same, recharge customers can be pushed make online purchases as well. And, that’s what exactly Snapdeal plans to do with FreeCharge – attract customers to Snapdeal after they have done their recharges and vice versa! Now Snapdeal can inherently offer recharges and coupon for their customers as well.
On the other hand, Freecharge acquisition means that Snapdeal will get a strong set of people in their ranks. FreeCharge has Kunal Shah, Alok Goel, Sharath Khurana and Rajesh Biyani who have strong experience in ecommerce verticals.
One interesting thing to note here. Ratan Tata is investor in Snapdeal as well as Freecharge’s competitor Paytm. Now that Snapdeal has acquired Freecharge, Ratan Tata will have invested in 2 stringent competitors!
And… Kudos to Both For the way they announced it on Twitter!
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