Just a few days ago, Flipkart reportedly raised $1 billion, and was even rumored to take over ebay’s India business. Now, according to reports there are strong hints that Flipkart and Snapdeal will enter into a merger deal, allowing a joint entity to tackle the cut throat competition from giant like Amazon and PayTM with with its newly launched online marketplace — PayTM Mall.
An ET report claims that Japanese giant SoftBank is facilitating a merger between Snapdeal and Flipkart, and is likely to invest $1.5 billion into a joint entity with a roughly 15 percent stake. It is worth noting that SoftBank has more than 30 percent stake, and is one of the biggest investors in Snapdeal, which drew valuation at $6.5 billion in 2016.
According to the report, the merger deal will likely to see sell out of another $1 billion share from Tiger Global, which is believed to be the biggest investor in Flipkart. Tiger is expected to recover its investment by selling 10% of its approximately 30% stake in Flipkart.
“SoftBank and Flipkart have agreed on the broad contours of the deal. If these terms stay on track, it’s likely that the talks will culminate into a definitive transaction by late April,” said the report.
While Flipkart appears to have sustain the intense competition, the smaller players, especially Snapdeal, have faced the major turbulence as the company had reportedly layed off around 600 employees. According to a Hindu report, Snapdeal is left with cash that will last for the next 10-12 months at most.