In a bid to salvage its investee firm Snapdeal from going under completely, Japanese internet and telecom conglomerate SoftBank Corp has now turned its sights on cash-strapped e-commerce firm Flipkart.
SoftBank is pushing for a merger between online marketplace Snapdeal and its rival Flipkart in what could be the biggest M&A deal in the Indian e-commerce sector, a report in the Times of India stated.
Last year in August, VCCircle was the first to report that Snapdeal had initiated preliminary talks with Flipkart and Amazon for a possible merger.
SoftBank may invest up to $1.5 billion in the merged entity, giving it close to 15% stake in it, the TOI report added. It also mentioned that US-based Tiger Global, Flipkart’s biggest investor, will offload 10% stake of its 30% holding in the firm.
Last week, VCCircle first reported that Tiger Global may have struck a deal with Microsoft and other new investors to sell a part of its stake in Flipkart with three-fold return.
Email queries sent to Snapdeal and Flipkart confirming the development did not immediately elicit a response at the time of filing this report.
Flipkart, which has seen its valuation being marked down successively by existing investors, has been exploring various options, including merging with eBay.
The part-sale of its Flipkart stake aligns with Tiger Global’s strategy to book some gains before actively investing in the country again, VCCircle had reported earlier. It is part of its broader plans to monetise stakes in its major bets, such as Flipkart, Ola and Quikr, in the near term.
This part-exit would mean three-fold return for Tiger Global’s biggest investment in India, better than some of its poor exits such as Caratlane last year, where it made no gains at all. Except MakeMyTrip and JustDial, Tiger Global has seen no impressive exits in India yet.
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