Mergers and acquisitions have been in news from the beginning of the year. Recently, two giant telecom companies merged to compete with Airtel. Nowadays, I think business rivals are following the dictum of Enemy’s Enemy is Friend.This time an out of the box news is catching people’s attention and that is the merger of Snapdeal and Flipkart in order to give a tough competition.to their business curbing rival Amazon.
Reason to Merge
Snapdeal and Flipkart, though have great products and competitive price range are unable to cater to the customers and therefore, the companies have been facing decline in business reason being that some products are exclusively available on amazon and the latter has been offering great deals to their prime customers. In this context, snapdeal got knocked down for its relatively high price while Flipkart lost its customers’ trust due to low-quality products delivered to the receivers. Now these two companies, if merged, will do wonders or blunders, only Almighty knows.
Role of Softbank
Tiger Global, the nodal funding agent of Flipkart has been in a discussion with Softbank to invest in this merging entity. Tiger Global has offered to divest its third part of the shares from Flipkart of Softbank agrees to invest 1 billion in the to-be-formed entity. Softbank, also, is exploring the new investment options in India and may be start off with Flipkart.
It is also predicted that e-bay owing to its poor performance in India with dilute itself in Flipkart to give a tough call to Amazon. But, will Flipkart, with two other components power will be able to curtail Amazon’s business is still a doubtful condition
Tiger Global even after selling the 10% share from the 30% will be the largest investors in while Softbank if invests in this will hold the investment of 1.5 billion approximately. Softbank is also planning to enroute the investment in Flipkart through Vision Fund which will work as an investment vehicle that does engross technology giant sponsors like Apple.
Will Amazon customers entrust this new emerging entity. Will Flipkart and Snapdeal be able to revive their market-position and will Softbank’s investment give any returns, we all will be looking forward to answer all these questions, till the I can also wish Flipakart and Snapdeal good luck.