Snapdeal rumored to be investigating merger

20 Aug 2016

This could be the consolidation of all consolidations.

According to VCCapital, India’s homegrown e-commerce company Snapdeal approached competitors Flipkart and Amazon India about the possibility to merge. If Snapdeal merged with either one of those two players, it would be a really big consolidation in the booming, Indian e-commerce market.

However, Flipkart and Amazon India both denied the VCCapital report, calling it “baseless” and “false”.

The report alleged Snapdeal co-founder Kunal Bahl met with top executives of Tiger Global Management, the U.S.-based investment giant and the largest investor in Flipkart, presumably to discuss the issue.

Tiger Global has invested an estimated $1 billion U.S. in Flipkart; Naspers, the South African media giant, is another major Flipkart investor.

Snapdeal raised $627 million in 2014, followed by a second round of funding of $500 million last year. In total, Snapdeal has raised around $1.65 billion from about two dozen investors. These include SoftBank and SoftBank-backed Chinese e-commerce company Alibaba, Taiwanese contract electronics manufacturer Foxconn, EBay Inc., Indian media company Bennett Coleman & Co. Ltd. (publisher of the Times of India), and venture capital investors such as Bessemer Venture Partners, Intel Capital, Iron Pillar, Kalaari Capital and Ratan Tata.

Snapdeal, Flipkart and other Indian e-commerce firms are feeling pressure on their margins, after the Indian government blocked deep discounting, which had begun to hurt offline retailers. The two Indian entities are also facing stiff competition from Amazon, that has been spending heavily on growing the market in India, focusing in part on, its e-commerce / classifieds hybrid. (See our report here).


Radhika Sachdev