Info-tech

Flipkart aims to bag Snapdeal for $400 m

Sangeetha Chengappa K Giriprakash Bengaluru | Updated on January 27, 2018 Published on June 21, 2017

BL22_NEWECO_SNAPDEAL   -  REUTERS

Deal most likely to come through in early July



Flipkart’s acquisition of Snapdeal could come through in July, at a valuation that is much less than had been initially envisaged. While Snapdeal is gunning for $1 billion from Flipkart, the latter is only willing to pay $350-400 million.

Sources said that Snapdeal, on its part, will only agree to the much-diminished amount only for its marketplace alone, minus its two growing logistics businesses — Vulcan Express and Unicommerce eSolutions. The two together are valued at $200 million.

Investors and promoters have already held several rounds of talks, but neither of the two e-commerce players were able to arrive at a right timeline for the acquisition.

Flipkart and Snapdeal had signed a non-binding term sheet in the last week of May, after which Flipkart started its due diligence on Snapdeal, and the deal will most likely come through in the first week of July, according to a senior Snapdeal official.

“Snapdeal’s two subsidiaries, Vulcan Express and Unicommerce, would be critical to Flipkart and fit into its broader business model. Acquiring Snapdeal without the two subsidiaries does not make any business sense for Flipkart,” said Sanchit Vir Gogia, Chief Analyst and CEO, Greyhound Research.

Logistics arms

Unicommerce is an e-commerce management software and fulfilment solution provider that Snapdeal acquired in early 2015. It helps Snapdeal manage vendors, inventory, warehouses, shipments and returns. Vulcan Express is Snapdeal’s fully owned, end-to-end logistics business whose core business comes from Snapdeal. It has also been serving clients in both B2B and B2C spaces since April this year.

Over the past 18 months, Snapdeal has invested in Vulcan’s infrastructure across top 10 metros and 80 key cities strategically connected to satellite towns in tier II and III cities, which will allow businesses to deliver an enhanced customer experience to the farthest ends of the country.

Snapdeal estimates Vulcan’s business to grow four times in 2017, contributing significantly to Snapdeal’s revenues.

Snapdeal laid off 400 employees in March this year.

The company has also witnessed a host of senior management exits over the past few months, the most recent one being that of HR Head Saurabh Nigam.

Published on June 21, 2017
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