After the major layoff by Snapdeal, a lot was heard about its merger with the eCommerce giant, Flipkart. Softbank was playing a major role in the procedure of merger and working to achieve a strong hold in the market. After moving closer to the merger, Flipkart was likely to value Snapdeal between $950 million and $1 billion for this deal. It had acquired Myntra and Jabong earlier, the acquisition of Snapdeal will make it the largest e-commerce player in the industry.
The acquisition came through in July, at a much lower valuation than earlier expected. While Snapdeal was expecting $1 billion from Flipkart, the latter had valued Snapdeal at only $350-400 million. Sources mention that Snapdeal will only agree to this amount for its marketplace alone, minus the two logistics businesses- Vulcan Express and Unicommerce eSolutions. These two together are valued at $200 million. There have been several rounds of talks, but nothing has come out of it. There has been no specific timeline for the acquisition to work out.
Both the eCommerce giants had signed a non binding term sheet in May, after which the due diligence was started by Flipkart and this deal is most likely to come through in July. Experts suggest that acquiring Flipkart without its subsidiaries makes no sense. Vulcan Express and Unicommerce are critical for Flipkart and fit the broader business model, hence, its acquisition is extremely important to make business sense. Unicommerce is an e-commerce management software which was acquired by Snapdeal in 2015. This software helps Snapdeal manage the vendors, inventory, shipments, returns and warehouses. Vulcan Express is a fully owned business of Snapdeal which has been serving clients in B2B and B2C spaces since April. In the past 18 months, Snapdeal has invested in the infrastructure of Vulcan across the top 10 metros and 80 key cities in order to connect the satellite towns in tier 2 and tier 3 cities. It is aimed at enhancing customer experience across the farthest ends of the country. The business is estimated to grow four times in 2017, which will also have a major contribution to the revenues of Snapdeal. The tussle over the subsidiaries are delaying the merger. Snapdeal is also open to the idea of de merging both the firms and selling it separately. It will take a few more months for the merger to work out due to various regulations on the same.
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