Indian E-commerce’s Giants
Snapdeal, reportedly the fourth-largest player in the e-commerce business, is close to finalizing talks to take over its nearest rival ShopClues and has already started the due persistent process. This development comes in after the previous discussions about the deal that fell apart due to disagreement on its financial terms.
ShopClues and Snapdeal Partnership
Citing two anonymous sources, an ET report said that if the 100% buyout deal is successful, all of ShopClues’ investors, including Singapore’s sovereign wealth fund GIC, Helion Venture Partners, Tiger Global, Nexus Venture Partners and Unilazer Ventures will move to Snapdeal. The all-stock deal, expected to go around $200-250 million, will give away outside to ShopClues’ investors, including Singapore’s sovereign wealth fund GIC, Helion Venture Partners, Tiger Global, Nexus Venture Partners, and Unilazer Ventures. The deal was likely to see the investors get one Snapdeal share for every nine they hold if the merger went through as planned, and would give them a 10% stake in the combined entity. “The task for Shopclues is to get at least a 30% stake in Snapdeal as a part of the transaction,” they added. The management and founders, Radhika Aggarwal and Sanjay Sethi, may also ‘get a small cash exit’. This development comes at a time when Snapdeal has charted a massive turnaround from its experimental, crisis in 2017, back when it was involved in a huge mix-up but ultimately unsuccessful collaboration talks with Flipkart.
ShopClues was founded in July 2011 by Sandeep Aggarwal, Radhika Aggarwal, and Sanjay Sethi. It is a managed marketplace that aims to provide a unique online shopping experience to its customers. However, in 2013, Sandeep got arrested by the FBI in San Jose. Post his arrest, Sandeep had disassociated himself from the company and Sanjay Sethi took over the role of CEO. Last year in July, it was reported that global online retailer eBay had held talks for a collaboration with ShopClues. It is speculated that Shopclues had held talks with multiple e-commerce players including Flipkart, Paytm Mall, and Snapdeal for potential acquisition deal. In November 2018, ShopClues reported a total income of $37.7 Mn (INR 273.3 Cr), an increase of 46% from $25.81 Mn (INR 187.1 Cr) in the previous year. It also narrowed its net loss by 40% to $28.17 Mn (INR 208.14 Cr) for FY2017-18. Snapdeal, which now has over 77 million users every month, had nearly 190 million stock keeping units listed by more than 500,000 registered sellers.