The merger of Snapdeal and ShopClues, which has been in the works for months now, may not materialize after all. A report on Economic Times indicates that the talks have collapsed after Snapdeal realized ShopClues could be sitting on huge debts it had not factored earlier. The due diligence exercise carried out as part of the takeover process appears to have brought out the anomalies. The debts might put the cost of the deal itself in a different perspective.
It was supposed to be an all-stock deal and if the deal had gone through, all debts on the books of ShopClues would have been the liability of Snapdeal. The liabilities reflected in the books of ShopClues include tax dues and payments owed to the vendors and so on. The exact amounts on the liability column have not been disclosed. The number of orders being received on the site too is reportedly much lower than what has been quoted earlier. Sometimes, companies treat such instances as the lack of propriety on the part of the management and back off on that premise alone. In this case, there is no official word from Snapdeal on the issue; therefore, it is too early to reach a conclusion.
ShopClues claims things arenâ€™t as bad as it is made out to be and that they are doing 65,000 to 70,000 orders a day. They even say their new social selling platform EzoNow is doing quite well. They claim a membership of 500,000 resellers on this platform.
Snapdeal used to be valued at $6.5 billion way back in 2016 and ShopClues at $1.1 billion. The question on everyoneâ€™s mind now would be how much are these ecommerce ventures worth now? The jury might be out on that.