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Flipkart destroys Snapdeal’s Unicorn status – Offers $400 million

In an interesting turn of events in Flipkart-Snapdeal merger. The homegrown e-commerce giant, Flipkart has revealed its intentions to pay only $300-$400 million for Snapdeals acquisition. This is against the trend which was not expected at this stage.

In the recent past, Flipkart’s acquisition of Snapdeal was pegged at a valuation of $1 billion. The billion dollar valuation was in place when the firm was at $6.5 billion valuations a year before.

As per the reports, Snapdeal is not going to sell its two money making business. These are Vulcan Express and Unicommerce eSolutions. Both these firms are at $200 million value and are doing good business from the day of their inception.

Unicommerce is a management software for e-commerce and fulfilment solutions provider. Snapdeal acquired this firm in 2015. The main function of this firm is to help manage vendors, warehouses, inventory, returns and shipments. Moreover, Snapdeal fully owns the Vulcan Express. It is in the end-to-end logistics sector. Since April 2017 the firm is serving clients from both B2C and B2B sectors.

In a press release, Snapdeal estimated that Vulcan’s business will see a surge of at least four times in 2017. It will contribute to the Snapdeal’s revenues.

Flipkart and Snapdeal had signed the letter of intent for this merger in May 2017. In the same period, Snapdeal received an emergency funding round of INR 113 crore from its founders and Nexus Ventures Partners. As per press reports circulating in the media. Softbank has bought further stakes in the firm, raising its total shares to 47.5%. This resulting in the resignation of Vani Kola of Kalaari Capitals after its shares were in possession of SoftBank.

However, in all these matters, Flipkart is keeping itself aloof from answering to media queries. In a statement, it said that these are speculative news and the company would not comment on it.

It seems that the investors in both these firms are not keen on certain terms. It is still wide open and the deal might not go through smoothly. Wipro chief Azim Premji had also raised his doubts with regards to minority stakes. Tata and other investors also have their share of interest in this deal as they all are party to it. Previously when the firm was pegged at $1-billion. The founders stood a chance to rake in $30 million each. However, with such a low offer now from Flipkart, this amount will plunge to a great extreme.

The days ahead are interesting as the suspense of Flipkart-Snapdeal saga continues to unravel in front of us all.

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TechPluto Staff: