Of course, Snapdeal isn’t worth $850 mn, but in e-commerce world, weird is normal
Online retailer Flipkart has sent a revised buy offer of about $ 850 million to its smaller rival Snapdeal, according to a mint report. It was about $ 150 million more than his offer had been around for two weeks, which was rejected by Snapdeal’s board.
Snapdeal that is worth so much value? Of course not. Its market share has declined rapidly and has almost disappeared from the list of preferred sites for online shopping. Single-left Snapdeal will collapse.
If Snapdeal collapses, SoftBank will end up with the egg in the face of investing almost a billion dollars in a failed business. To save face, it is expected to negotiate an agreement with Flipkart and its largest investor, Tiger Global.
Flipkart buys Snapdeal in a global offering, and SoftBank will invest to convert a good sum into Flipkart, in addition to directly buying a stake in Tigre.
The result: SoftBank does not need to cancel all of its investment in Snapdeal; You will still have the skin on the game in India online retail opportunity, in fact, now with the largest company in the industry.
For Flipkart, the agreement will be one of the largest providers of Internet companies in global funds, and will also provide an outlet for one of its major investors.
Of course, all this roundabout set seems strange, but then, in relation to Internet companies and their funding, there is virtually nothing ordinary.
If SoftBank adequately funds Flipkart and helps eliminate the threat from Amazon.com Inc., who knows, everyone involved in the current transaction of the circuit will be left with smiles.
And perhaps, as a measure and speculative, SoftBank may well be joined by Alibaba in support Flipkart, now are common investors Paytm.
But things can not end well either. It seems that there is no end to how Amazon can invest in the Indian market and, given its international experience, it seems to have losses of contributions for years to come.
SoftBank, too, may have enough pockets to fund years of losses and liquidity Flipkart, but for what purpose?
In addition, if the reports are certain that Flipkart evolves and access requirements for a higher valuation of Snapdeal is a signal that SoftBank fun to a point where the interests of other Flipkart investors may be compromised.
Curiosity may be normal for the time in the world of internet funds, but when it all goes, it is also likely that the largest Internet company in India and investors end up being in knots.