The more than six months of hard negotiations failed to yield any results, with the beleaguered e-commerce marketplace Snapdeal calling off its merger talks with bigger rival Flipkart, according to a report by The Economic Times.
Snapdeal will now tread an independent path, a company spokesperson said.
It is not immediately clear as to what led to the abrupt termination of talks. We are reaching out to Snapdeal and Flipkart for comments and will update this copy when we hear from them.
“Snapdeal has been exploring strategic options over the past several months. The company has now decided to pursue an independent path and is terminating all strategic discussions as a result,” a Snapdeal spokesperson said in a statement.
“Snapdeal’s vision has always been to create life-changing experiences for millions of buyers and sellers across India. 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” the spokesperson added.
According to SoftBank, which was pushing its portfolio Snapdeal for a deal with Flipkart said: “Supporting entrepreneurs and their vision and aspirations is at the heart of (Chairman) Masayoshi Son’s and SoftBank’s investment philosophy. As such, 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.”
Founded in February 2010, Snapdeal was the second biggest e-commerce company after Flipkart until 2015. It was valued US$6.5 billion when it raised funding early last year. The company began to crash after the entry of Amazon, which ate into its market share to become a formidable force in the Indian e-commerce market. Over the past two years, Snapdeal kept losing market share to both Amazon and Flipkart, despite having invested significantly in branding and marketing.
To date, Snapdeal has raised about US$2.18 billion in investment, which included a US$627 million from SoftBank in 2014. Its other investors include Kalaari Capital, Nexus Venture Partners, BlackRock, Temasek, Foxconn, eBay, Premji Invest, Intel Capital, Bessemer Venture Partners, and Ratan Tata. Recently, eBay invested nearly US$500 million in Flipkart and sold its Indian unit to the Bangalore-based company.
Recently, Snapdeal received about US$17.5 million in emergency financing from existing investor Nexus Venture Partners and Co-founders Kunal Bahl and Rohit Bansal.
A few weeks ago, an online seller group sought the intervention of the government of India to stop Snapdeal from proceeding with its merger with Flipkart, until the former settles payment dues of sellers on its platform. However, Snapdeal refuted their claims and said it did not owe money to sellers on its platform.