Snapdeal is expected to sell Vulcan to Mumbai-based AllCargo for Rs 20-30 crore.

Snapdeal in advanced talks to sell logistics arm Vulcan Express to AllCargo
Atom M&A Friday, October 20, 2017 - 11:05

After successfully selling of payments arm Freecharge to Axis Bank, ecommerce firm Snapdeal is now in advanced talks with AllCargo to sell its logistics arm Vulcan Express for around Rs 20-30 crore.

MoneyControl quotes sources saying that while term sheet hasn't been signed yet and the company is evaluating a draft, it hasn’t been decided yet whether it will be an all-cash deal or not. However, Snapdeal is pushing for an all-cash deal, similar to how it sold off Freecharge.

Snapdeal has so far invested nearly $29.4 million in Vulcan Express, compared to which the Rs 20 crore is an extremely small amount. Snapdeal confirmed to MoneyControl that it is considering strategic options for Vulcan Express.

“Vulcan Express is evaluating multiple strategic options and any final decision will be made only after consultation with our Board on the relative merits of each option, which has not occurred yet,” said a Snapdeal spokesperson in an email response.

AllCargo is a Mumbai-based logistics company with a presence in over 160 countries.

Mumbai-based AllCargo provides global transportation logistics solutions and has a presence in over 160 countries. It also proides ecommerce logistics, warehousing solutions and several other logistic services. MoneyControl reports that the company also announced earlier this year that it plans to enter last mile delivery business and that it was looking at acquisitions worth Rs 200 crore this year.

Vulcan's acquisition could be a part of this strategy.

Over the past year, Snapdeal lost out in the ecommerce race with funds shrinking drastically. Its largest investor SoftBank was looking to sell off the ecommerce major to rival Flipkart. While the deal did not go through, Snapdeal decided to survive on its own through Snapdeal 2.0. As part of this strategy it sold off its payments arm Freecharge to Axis Bank for Rs 300 crore after it also failed to keep up against rivals such as Paytm and Mobikwik.

Vulcan too saw its delivery numbers shrinking because Snapdeal was its biggest client. Vulcan offers services such as pickup, consolidation and fulfilment operations, warehousing solutions and last mile delivery services.

Apart from AllCargo, Snapdeal was even in talks with other logistics companies such as Gati and TVS Logistics. Sale of Vulcan Express will further help Snapdeal is getting back on its feet.

"If all goes well, the deal with AllCargo will be finalised in the next 10 days," the source told MoneyControl.

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