Snapdeal Up For Sale? Report Claims Paytm, Flipkart In Talks To Acquire Snapdeal At A Valuation Of $1.5-1.8 Billion
It seems patience and money, both are running out, when it comes to Snapdeal’s financial health. As per latest reports coming in, Snapdeal is right now amidst advanced talks to sell out.
And their biggest competitors: Flipkart and Paytm have emerged as the too contenders for acquiring Snapdeal, which is India’s thirds largest e-commerce portal as of now.
The insider report claims that Snapdeal is looking for a buyer which can shell out $1.5 to $1.8 billion for them. And in case this deal is finalised, then it shall be the biggest acquisition Indian e-commerce sector has ever witnessed.
Softbank Leading The Negotiations
Softbank, which owns 35% stake in Snapdeal, is leading the negotiations for selling Snapdeal.
Softbank has invested close to $900 million in Snapdeal, and it seems that the time is now ripe for them to monetize their investment.
Considering that Softbank has stake in Paytm, as well as in Alibaba, it will make greater sense if Paytm acquires Snapdeal, instead of Flipkart. Besides, Alibaba also has a stake in Snapdeal, thereby making the circle complete.
In case Paytm acquires Snapdeal, then the investments of Alibaba and Softbank will remain in their own portfolios, thereby creating a favourable environment for growth.
Snapdeal Would Be Sold For A Loss?
Till now, Snapdeal has raised close to $2 billion from investors ranging from Kalaari Capital, Nexus Capital, and Alibaba Group to Softbank. $900 million investment has been made by Softbank alone.
Snapdeal had raised their last funding at a valuation of $6.5 billion. However, the current valuation at which Snapdeal is rumoured to be getting sold is paltry $1.5-1.8 billion, which is almost 70% less than what Snapdeal was valued at its peak.
And the very fact that Softbank, their largest investor is leading the negotiations means that existing investors in Snapdeal are actually panicking right now.
Snapdeal has officially denied this rumour, as they issued a statement: “Your 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,”
Both Paytm and Flipkart have refused to give any statements in this regard, and Softbank too hasn’t responded.
Desperate Days For Snapdeal?
Startup community was alarmed when we reported that Snapdeal may fire 1000 full time and 8000 contractual workers, due to low revenues, and increased losses.
This news became a reality when Snapdeal confirmed mass firing in the month of February, which we declared as the Black Day for Indian E-commerce.
The same month, we reported that Snapdeal is losing Rs 160 crore per day, and they have had only Rs 1000 crore with them. At that time too, we had predicted a rumoured merger between Paytm and Snapdeal, which has been confirmed by the report by LiveMint.
Vendors associated with Snapdeal has already claimed that Rs 300 crore is stuck with them, as Snapdeal isn’t making the remaining payments, even as Commerce Ministry jumped into the controversy, and assured help for the vendors.
Such is the desperation that Softbank has promised to infuse $50 million as bridge money until the Snapdeal’s merger or acquisition is complete.
We will keep you updated as we receive more information.
Snapdeal is worst even my money is hanging as a seller I will complaint in consumer court
This was sure to happen in near future. The same will be done with Flipkart.com too very soon.