Snapdeal, the eCommerce startup which was in talks with Flipkart for a merger, has now officially walked away from the deal. The struggling eCommerce company will now try to run on its own as an independent entity.
To continue its run independently, the company will now be looking forward to cutting costs and selling its assets. Its parent company sold payments platform FreeCharge to Axis Bank for Rs 385 crore.
The FreeCharge deal provides company with the necessary financial boost, and in terms of resources as well, to continue the journey towards building an eCommerce platform with ‘Plan B’.
This decision of not selling the company to Flipkart, marks a big win for Snapdeal founders Kunal Bahl and Rohit Bansal – who were against the sale. Despite the company’s largest investor – SoftBank’s tremendous efforts to push for the acquisition, the sale is not going forward.
In a statement, a Snapdeal spokesperson said, “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.”
“Supporting entrepreneurs and their vision and aspirations is at the heart of 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,” added the spokesperson in a statement.
Last week, it seemed like the Flipkart-Snapdeal merger would finally be completed. The board of online marketplace Snapdeal gave the go-ahead to the company to continue negotiations to sell itself to Flipkart, after rejecting the initial offer. Flipkart had initially offered around $750 million for the deal, which was rejected by the Snapdeal’s board. Later, Flipkart submitted revised offer, increasing its offer to $900-950 million.