The much-awaited ecommerce deal between Flipkart and Snapdeal has been officially called off. As per a statement put out by Snapdeal, it has decided to pursue an independent path and is terminating all strategic discussions as a result
Snapdeal’s largest shareholder SoftBank has been trying to sell the ecommerce marketplace to Flipkart for the past six months. It was in talks to sell its ecommerce marketplace business to Flipkart for around $850 million.
"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," it said.
The company says that it now has a new direction, which is Snapdeal 2.0.
“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. We look forward to the support of our community, including employees, sellers, buyers and other stakeholders in helping us create a designed-for-India commerce platform,” Snapdeal’s spokesperson said
If the deal had gone through, it would have been the largest acquisition in India’s ecommerce space and would have created the largest ecommerce company in India to fight rival Amazon.
As per a PTI report, SoftBank is supporting the co-founders in this decision and has said that their vision is at the heart of Masayoshi Son's (SoftBank Chairman and CEO) and SoftBank's investment philosophy.
"...we respect the decision to pursue an independent strategy. We look forward to the results of the Snapdeal 2.0 strategy, and to remaining invested in the vibrant Indian e- commerce space," a SoftBank spokesperson told PTI.
Ever since SoftBank orchestrated the sale between the two ecommerce marketplaces, the deal was faced with several challenges.
After SoftBank managed to bring all stakeholders on board, Infibeam approached Snapdeal for a potential deal earlier this month. Interestingly, co-founders of Snapdeal Kunal Bahl and Rohit Bansal were in favour of this deal over the one with Flipkart as it would let them retain control over the marketplace they built.
Before that, PRemji Invest, one of the smaller stakeholders in Snapdeal objected to the deal over its structure and the special payout of an approximate $90 million to the second largest investors Kalaari Capital and Nexus Venture Partners.
The sale of core assets Snapdeal is referring to is the sale of its payments arm FreeCharge and logistics arm Vulcan Express.
Snapdeal sold FreeCharge to Axis Bank last week for Rs 385 crore. It is now in talks with several logistics players to acquire Vulcan express for Rs 100-120 crore