Snapdeal terminates talks for merger with Flipkart
Dear friends,
It's not just a news if you think some seriously. It's Indian habit to get divided instead of getting united. History is always before us to evidence it. Everybody knows that foreigner eCommerce Companies are everyday playing new game to capture Indian market in each sector with he help of Digital Marketing i.e. eCommerce. If our small small companies won't face them unitedly then they will definitely have to face problem.
Snapdeal on Monday terminated talks for merger with Flipkart and said that it will pursue an independent path.
The development comes just three days after Snapdeal announced the sale of its payments unit Freecharge to private lender Axis Bank for Rs 385 crore
Earlier report said that talks for the proposed acquisition of the beleaguered Snapdeal by larger rival Flipkart seem to have broken down after almost six months of negotiations, according to company sources.
The founders (Kunal Bahl and Rohit Bansal) and shareholders have not yet agreed on the terms of the deal as the former are pushing aggressively for continuing operations as an independent entity, one of the sources said.
They did not want to be named as they are not authorised to speak on the matter and the discussions are still under way.
When contacted, Snapdeal did not comment. A SoftBank spokesperson said “a board resolution is expected by the end of the day”.
Snapdeal’s largest investor, SoftBank, has been proactively mediating in the talks for sale for the past few months. The deal with Flipkart for $900-950 million, if it goes through, would mark the largest acquisition in the Indian e-commerce landscape.
The latest developments come within days of Snapdeal agreeing to sell its digital payment platform, FreeCharge, to Axis Bank for ₹ 385 crore.
Gurgaon-based e-commerce firm Snapdeal has terminated all talks for a distress sale to its arch rival Flipkart and wants to pursue an independent path, the company said in a statement.
"Snapdeal has been exploring strategic options over the last several months. The Company has now decided to pursue an independent path and is terminating all strategic discussions as a result,” Snapdeal has said.
Moneycontrol had first reported that the company is in discussion to pursue a Plan B, which has come to fruition now.
“We have a new and compelling direction - Snapdeal 2.0 - that uniquely furthers this vision, and have made significant progress towards the ability to execute this by achieving a gross profit this month. In addition, with the sale of certain non-core assets, Snapdeal is expected to be financially self-sustainable,” Snapdeal said in a press statement.
On July 28, Moneycontrol reported about how the founder and chief executive officer of Snapdeal Kunal Bahl had made his mind clear to the employees, within hours of the closure of the Freecharge deal that he was not in the favour of being acquired by Flipkart.
Key stakeholder, Softbank has also supported the company in this decision.
"Supporting entrepreneurs and their vision and aspirations is at the heart of Masayoshi Son's and SoftBank's investment philosophy. As such, we respect the decision to pursue an independent strategy. We look forward to the results of the Snapdeal 2.0 strategy, and to remain invested in the vibrant Indian e-commerce space," it said in a statement.
The development comes just three days after the country's erstwhile third largest e-commerce firm announced the sale of its payments unit Freecharge to private lender Axis Bank for Rs 385 crore. The deal has given Snapdeal much needed cash breather for survival.
One of the sources said if the decision to continue as an independent entity is accepted, it could see Snapdeal reducing its workforce significantly and scaling down operations.
Interestingly, in an e-mail to employees last week, Bahl had termed the Freecharge sale as a “great outcome” and said it would give Snapdeal the “necessary boost in resources” to continue its e-commerce journey.
The company is also holding discussions with potential buyers for its logistics arm, Vulcan Express.
The proceeds from Freecharge sale and Vulcan, when it comes in, could buy Snapdeal some months to continue independently, the source added.
One of the leading contenders in the Indian e-commerce space, Snapdeal has seen its fortunes falling amid strong competition from Amazon and Flipkart.
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