Snapdeal Vacates 60% Of Gurgaon Office Amidst Cash Crunch; All Eyes Now on the Merger With Flipkart!
If there was any doubt regarding the troubles of beleaguered e-commerce portal Snapdeal, then this news will remove all such apprehensions: They are vacating 60% of their Gurgaon office space due to a cash crunch, and a reduced workforce.
The only way Snapdeal can now survive is, by getting acquired or merged with their bigger competitor, and Flipkart seems the only option now. However, blocking this mega-merger is Nexus Venture Partners, which is an early stage investor at Snapdeal.
What will be the fate of Snapdeal, once hailed as India’s third largest e-commerce portal?
Snapdeal Will Let Go of 60% Office Space
Just two years back, Snapdeal had shifted to a new 4.5 lakh square feet campus at AFS Centre, Gurgaon. At that time, Snapdeal was in an aggressive growth mode, flushed with funds and a bright future.
However, things have gone downhill then, as they have posted record losses, and are right now gasping for funds, in order to survive another day.
After mass layoffs in February, Snapdeal has now decided to sacrifice 60% of their office space, located at AFS Centre in Gurgaon.
In an email addressed to all employees, Snapdeal said, “As you may be aware we are consolidating our offices across Gurgaon. We will vacate Centre B on April 30, 2017. Essentially there will be one tower in all compared to two each in two compounds,”
Out of 8000 employees which Snapdeal commanded at one point of time, only 2500 are now remaining.
Nexus Venture Partners Blocking Snapdeal Merger With Flipkart?
Nexus Partners, which were an early stage investor in Snapdeal, is apparently not convinced with the valuation of Snapdeal, and have blocked the merger; as of now.
As per reports coming in, Softbank, a majority stakeholder in Snapdeal, is aiming for a Snapdeal-Flipkart merger at a valuation of little more than $1 billion, in exchange for a stake in Flipkart. However, Nexus wants a valuation between $3-3.5 billion.
At its peak, Snapdeal had a valuation of $6.5 billion.
Nexus had initially made an investment of $12 million, and holds 12.2% stake in Snapdeal, due to this investment. Now, they want maximum ROI for the same.
Kalaari Capital, which is also an early stage investor in Snapdeal has agreed to SoftBank’s terms and conditions, and have approved the merger. To be fair with Nexus, Kalaari actually sold some of their stakes during the 2nd or 3rd round of funding, and have made a decent return as well. But Nexus have been holding on to their investment for a better return.
So now, all eyes are set on Nexus for finalising the deal.
Besides, it is also not clear whether Kunal Bahl and Rohit Bansal, co-founders of Snapdeal and owners of Jasper Infotech, have agreed to the merger or not.
And, interestingly, there are rumours going on regarding a possible acquisition of Freecharge by Mobikwik as well.
We will keep you updated as we receive more information on this news.