Bengaluru-based e-commerce marketplace Flipkart has appointed Goldman Sachs as an adviser for the proposed acquisition of rival Snapdeal, a financial daily reported.
The Economic Times said that the investment banking major will work closely with Snapdeal’s adviser Credit Suisse, in what could be the biggest merger in Indian Internet commerce history.
Citing unnamed sources, the report said that the offer for sale “is likely to be finalised over the coming weeks”.
Separate email queries sent to Credit Suisse, Flipkart and Snapdeal seeking comment did not elicit any response at the time of publishing this article. Goldman Sachs declined to comment.
The media report also said that Kalaari Capital and Nexus Venture Partners – early investors in Snapdeal – have given the green signal for the proposed merger between the two homegrown rivals.
Last week, Flipkart had announced its acquisition of eBay.in as part of a $1.4 billion (Rs 9,000 crore) fundraising round. It had secured the money from Chinese Internet giant Tencent Holdings Ltd, US-based online retailer eBay Inc. and software giant Microsoft Corp.
In August 2016, VCCircle was the first to report that Snapdeal was considering a merger with Flipkart. SoftBank and Tiger Global, the major investors in Snapdeal and Flipkart, respectively, now seem to be negotiating the proposed merger.
Flipkart’s other major investors include Naspers Group, Accel Partners and DST Global.
So far, Snapdeal has raised about $1.65 billion from about two dozen investors, including SoftBank and SoftBank-backed Chinese e-commerce company Alibaba, Taiwanese contract electronics manufacturer Foxconn, eBay Inc., Indian media company Bennett Coleman & Co. Ltd, and venture capital investors such as Bessemer Venture Partners, Intel Capital, Iron Pillar, Kalaari Capital and Ratan Tata.
Most Indian e-commerce firms have spent heavily on discounts and marketing over the past few years to build a strong customer base before working towards profitability. This has resulted in huge losses for most top e-commerce companies.
In an email correspondence with employees last week, Snapdeal co-founders Kunal Bahl and Rohit Bansal had claimed that the “well-being of the entire team” was their top priority. It said the founders were working with investors to ensure there was no disruption in employment.
However, most promises seemed undone by an admission in the letter that the “investors were driving the discussions around the way forward” – implying that they were the ones calling the shots and the founders have little, if any, say in the way things turn out in the near future.
Like this report? Sign up for our daily newsletter to get our top reports.