Flipkart wants Snapdeal at $400 mn minus logistics arm

E-commerce major Flipkart is willing to buy out online marketplace Snapdeal at $400 million. The deal that is expected to come through soon has valued Snapdeal around $300-400 minus its two logistics businesses- Vulcan Express and Unicommerce eSolutions, which is valued at $200 million, reported the Hindu Business Line.

The new twist in Snapdeal acquisition by Flipkart comes at a time when many media reports hinted that Flipkart will acquire Snapdeal in about $1 billion.

The deal is most likely come through in the first week of July. However, a Business analyst Entrackr talked to said Flipkart does not want to take risk but at the same time the deal without Snapdeal logistics arm does not make any sense.

Last Month, Flipkart and Snapdeal took a big step towards a merger when they signed a non-binding term sheet. Flipkart began a due diligence of Snapdeal. However, deal seems to be still stuck owing to differences among Snapdeals' investors.

Additionally, Flipkart isn’t willing to pay much for the beleaguered marketplace as it doesn't much value in the deal.

Also read: Flipkart-Snapdeal deal may tangle into FEMA trap

Some industry experts believe that Snapdeal is going Jabong way. Scouting for an acquisition last year, Rocket Internet owned Jabong (now owned by Flipkart via Myntra) was asking $700 million from probable bidders. However, after months of desperation, Jabong was acquired by Flipkart in about $70 million.

Both the logistics arm of Snapdeal has been doing decent business. Unicommerce helps Snapdeal manage vendors, inventory, warehouses, shipments and returns whereas Vulcan Express is end-to-end logistics business whose core business comes from Snapdeal.

In last one and half years, Snapdeal has invested in Vulcan’s infrastructure across top 10 metros and 80 key cities strategically connected to satellite towns in tier II and III cities, which will allow businesses to deliver an enhanced customer experience to the farthest ends of the country.

Snapdeal estimates Vulcan’s business to grow four times in 2017, contributing significantly to Snapdeal’s revenues.