Snapdeal close to acquiring ShopClues in all-stock deal: Reports

Gurugram-based online marketplace Snapdeal is close to acquiring its rival ShopClues in an all-stock deal, reports said.

The development comes more than a month after TechCircle reported, citing persons it did not name, that cash-strapped ShopClues had approached now-rejuvenated Snapdeal with a merger offer.

TechCircle also mentioned that Nexus Venture Partners, a common investor, is orchestrating the deal.

A CNBC TV18 report said that the deal is likely to value ShopClues at up to $250 million (Rs 1,743.4 crore at current exchange rate). Besides, both the parties are said to have started due diligence with an exclusivity agreement signed a few days ago.

A report in The Economic Times said that the deal is likely to see ShopClues’ investors get one Snapdeal share for every nine they hold. The deal is likely to give them a 10% stake in the combined entity.

The investors of ShopClues will roll over their investment into Snapdeal while the founders of ShopClues might get a small cash exit, the report added.

An e-mail query to Snapdeal did not get a response till the time of filing this report.

A ShopClues spokesperson, declining to comment on “industry rumours”, said that lower-income consumers in Tier-II and Tier-III cities have always been the firm’s core target audience since inception.

“There has always been interest in us and these speculations are no exception…We have, in the past, and will continue to in the future, pursue partnerships and commercial relationships with “rivals” if it helps us serve our consumers better,” the spokesperson added.

The company also said that its 2018-19 losses shrank to Rs 45 crore from Rs 210 crore for 2017-18.

Both e-commerce companies Snapdeal and ShopClues focus on unstructured and unbranded categories; both are attempting to create a strong user base in the less-explored markets of Tier-II cities and beyond; and both follow a distributed sourcing model.

At its peak, Snapdeal was valued at more than $6 billion and was considered a close competitor of Flipkart.

Likewise, ShopClues, which once replaced Snapdeal to claim the third spot in the e-commerce market, has long been losing momentum.

It had entered the exclusive club of unicorns, or startups valued at $1 billion each or more, after raising an undisclosed amount in a Series E funding round led by Singaporean sovereign wealth fund GIC in 2016.