Snapdeal is understood to have received a definitive agreement from Alibaba backed One97 Communications which operates Paytm to acquire the former's payment wallet business Freecharge.
Japser Infotech which runs the e-commerce platform Snapdeal is understood to have received a definitive agreement from Alibaba backed One97 Communications which operates Paytm to acquire the former’s payment wallet business Freecharge, said sources close to the development. Sources explained that the size of the deal is believed to be valued at $50 million, adding that both the parties have understood to have initiated discussion related to share purchase. “At the same time, Snapdeal is reportedly in talks with other parties including public sector banks and other companies, including Times Internet, as it looks to strike a better deal,” observed the source.
It is believed that Snapdeal first approached Paytm for the sale of Freecharge in February this year, after its talks with PayPal fell through. However, with conversations not leading into any conclusion, the company in the last few months is understood to have tried to struck a deal with other players including MobiKwik, Bank of Baroda, amongst others.
Denying the above report, a Freecharge spokersperson said, “Freecharge is currently engaged with multiple interested parties and expects to conclude a deal in the near future.” While an email sent to Paytm did not elecit a response till the time of going to press. It should be noted that in 2015 Snapdeal acquired FreeCharge for an estimated $400 million (Rs 2,400 crore). At the time, the deal was struck in 80% stock and 20% cash.
In may this year, SoftBank Group invested $1.4 billion in Paytm in lieu of 20% stake in the company. Post raising fresh investment, Paytm is currently valued at $7 billion post-money.
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Early this month, SoftBank at its annual earnings call said it had incurred losses of $1.4 billion (¥160.419 billion) on investments in e-commerce player Snapdeal and taxi aggregator Ola in the period to March 2017. The losses compare with a gain of $1 billion (¥114.377 billion) in 2015-2016. Freecharge, reported a loss of Rs 235 crore on a revenue of Rs 36 crore for the year ended March 2016. The company in FY15 posted losses of Rs 269 crore on the back of revenues of Rs 35 crore.