In a surprising turn of events, the e-commerce giant called off the $950 million-takeover (over Rs 6,000 crore) by Flipkart, apparently over differences in valuation.
It seems that Snapdeal Co-founders, Kunal Bahl and Rohit Bansal, are trying hard to regain the lost momentum after recent crisis, which even led to the situation to sell-off the company. However, in a surprising turn of events, the e-commerce giant called off the $950 million-takeover (over Rs 6,000 crore) by Flipkart, apparently over differences in valuation. The much-discussed merger talks were initiated in March but contours of the deal could not reach a finality even after several rounds. “Snapdeal has been exploring strategic options over the last several months. The company has now decided to pursue an independent path and is terminating all strategic discussions as a result,” a Snapdeal spokesperson said in a statement, without naming Flipkart. After Monday’s development, Co-founders, Bahl and Bansal, wrote a letter to the e-commerce company’s employees. Below is the full text of that letter:
Over the last few months, our company has been engaged in strategic discussions with other players. A lot of time and effort has gone into the process from all participants in this exhausting process. The process has led to intense speculations and uncertainty for our team, partners and shareholders. And now it is time to finally put an end to this saga.
We will be continuing the Snapdeal journey as an independent company. As we have often discussed, the opportunity of e-commerce in India is immense, and the surface of this $200 Billion market has barely been scratched yet. We have a tremendous team, millions of loyal customers, hundreds of thousands of motivated sellers and a phenomenal platform that has been built with years of effort. All the ingredients of success have always been there in our company. And after the last few months of tumultuousness, it is time to focus on the business and leverage all our strengths to progress towards our vision of building the best marketplace to connect buyers to sellers in India.
The good question to ask is why are we moving down an independent path, when so much effort went into determining a strategic combination. There are a few reasons for this, which go beyond the fact that the deal being contemplated was incredibly complex to execute as reported extensively by the media. Firstly, there isn’t going to be one successful model for e-commerce in India. In every market, there are multiple successful e-commerce businesses, and as long as one’s strategy is differentiated and has a clear path to success, there is a great company that can be built. We firmly believe in our new direction – Snapdeal 2.0 – part of which is a laser focus on being a champion for all sellers in India, enabling anyone to setup a store online in a few minutes and focusing on providing large selection of products at great prices to consumers. Secondly, we have made tremendous progress towards this new path over the last few months and are already profitable at an gross profit (a.k.a. net margin) level, with clear visibility to making upwards of INR 150 Crores in gross profit in the next 12 months. Finally, with the ongoing streamlining of costs and sale of some of our assets, such as Freecharge, we are financially self sufficient as a company and don’t need to raise additional capital to reach profitability. Needless to say, we will need to keep a tight control on our costs and work towards becoming a hyper efficient culture delivering profitable growth, month on month.
Many of our team members have spoken with me over the last few weeks, reiterating their interest in the fact that Snapdeal should continue in its independent capacity. The passion our team has for our purpose, and the signs of progress being very visible are key reasons why our team continues to be inspired to pursue an independent path. So, the decision is made. There is zero ambiguity. We will be running the company as we have been and rapidly moving ahead with our mission.
Success is never final, failure is rarely fatal; it is the courage to continue that counts. Let’s work together to make Snapdeal 2.0 a super success!
Kunal & Rohit