Snapdeal likely to acquire Shopclues in a $ 200-250 million deal

India's booming e- business platform is preparing for another M&A (Merger and Acqusition) The buzz is that Gurugram - headquartered Snapdeal, reportedly  the fourth-biggest player in the business, is near concluding talks with its closest adversary ShopClues and has just begun the due diligence process.

The deal will be an all-stock deal and is expected to be valued between $200 million and $250 million.

The deal is likely to see Shop-Clues investors get one Snapdeal share for every nine they hold if the merger goes through in this planned structure, and will likely give them a 10% stake in the combined entity. 

ShopClues' investors, including Singapore's sovereign wealth fund GIC, Helion Venture Partners, Tiger Global, N Nexus Venture Partners and Unilazer Ventures, are expected to exit post the deal. NVP is also an investor in Snapdeal.

“The ask from Shopclues is to get at least a 30% stake in Snapdeal as part of the transaction,” a source from Snapdeal said. 

Both Snapdeal and ShopClues are smaller players in the e-commerce sector in India, in comparison to Flipkart and Amazon.

There are reports that the management and founders, Radhika Aggarwal and Sanjay Sethi, may get a small cash exit.

"Snapdeal and Shopclues are trying to make a business in the long-tail category by selling items below Rs 900-1,000 with no promise of next-day delivery. This allowed them to tap into first time online buyers in tiers II and beyond cities in the past," Satish Meena, senior forecast analyst at research firm Forrester Research, told reporters. 

However Snapdeal cofounder and CEO Kunal Bahl hasn’t given any statement  while a ShopClues spokesperson said the company would not comment on market rumours. 

With the help of this coalition Snapdeal will have an increased consumer base which will prove to be a greater boom for the company especially in tier 3 and 4 areas where ShopClues has had a focus on.

ShopClues has been struggling to keep its orders up over the past year, and now sees about 40,000 orders per day, while Snapdeal sees about 2 lakh orders per day.

 

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