Snapdeal, the Gurugram-based e-commerce platform is all set to acquire ShopClues and has already started the process, it seems.
The all-stock deal, to the tune of about $200-250 million will most probably seethe ShopClues investors exit. These include Helion Venture Partners, Tiger Global, Unilazer Ventures, Nexus Venture Partners, and Singapore’s sovereign wealth fund GIC.
If the merger comes through, these investors were likely to get one Snapdeal share for every nine that they hold and would also garner them a 10 per cent stake in this combined system.
According to sources, as part of the transaction, the ask from ShopClues is to garner at least a 30 per cent stake in Snapdeal. Also, the management and founders, Radhika Aggarwal and Sanjay Sethi may get a small cash exit.
A big consolidation move in the long-tail e-commerce market will be gained if the Snapdeal-ShopClues deal comes through. This move looks at tapping into small towns and focusses on low-prices products that generally fall in the INR 500-1,000 range.
According to Satish Meena, Senior Forecast Analyst, Forrester Research, by selling products below INR 900-1,000 with no promise of next-day delivery, Snapdeal and Shopclues are trying to make a business in the long-tail category. Thus, in the past, it allowed them to look into first time online buyers in Tier II and other cities, he said.