Bengaluru : Snapdeal is in advanced talks to buy online mobile recharge platform Freecharge for $450 million (Rs 2,800 crore) in what will be the biggest deal in India’s consumer Internet industry, according to two people involved in the transaction.
The deal will cement the Delhi-based marketplace’s reputation as an acquisitive and ambitious company as it takes on Flipkart and Amazon for leadership in India’s online retail business. “The two companies have signed off on the deal,” said one person privy to developments. “It will be a combination of about 40% cash and the (balance) in stock.”
So far, Delhi-based Jasper Infotech, which owns and operates Snapdeal, has announced five acquisitions and is expected to match that number in the coming fiscal.
The biggest deal in the consumer internet space so far is Flipkart’s acquisition of fashion portal Myntra for an estimated $370 million (Rs 2,300 crore) in May 2014.
Backed by Japanese conglomerate SoftBank, which invested $627 million (Rs 3,800 crore) in the company last October, Snapdeal is looking to build competence in the mobile and data analytics space.
Freecharge, founded in 2010 by serial entrepreneur Kunal Shah and Sandeep Tandon, head of technology conglomerate Tandon Group, is backed by Sequoia Capital and hedge funds Valiant Capital and Hong Kong-based Tybourne Capital Management which is also an investor in Snapdeal.
Last month, Freecharge, now led by CEO Alok Goyal, raised $80 million (Rs 496 crore) in funding, as it looks to increase its customer base by two to three times from the current 20 million. The Bengaluru-based company offers promotions or discounts from restaurants and retailers every time a customer uses its platform for a recharge.
Snapdeal and Freecharge did not respond to email queries on the deal. On Wednesday, it was reported that Snapdeal is in talks with China’s Alibaba to raise $1 billion (Rs 6,200 crore) and also that it is negotiating to buy advertising network Komli Media for $300 million.
The buzz of activity around the company, observers said, is a sign that Snapdeal is looking to mimic the Alibaba model in India. Kartik Hosanagar, a professor of Internet commerce at the Wharton School of Business, described the imminent acquisition as an “interesting move” because it will provide Snapdeal with access to the fast-growing mobile platform of Freecharge as well as access to credit and debit card information.
