Valuation to too many demands: Why Snapdeal-Flipkart merger is dragging

The Snapdeal-Flipkart merger has turned into the most complex acquisition negotiation

Indian Companies News : In the universe of Snapdeal and Flipkart everyone is hopeful, but of different things. Japanese telecom giant SoftBank and US hedge fund major Tiger Global are hopeful of merging the two e-commerce players. Snapdeal’s board members, such as Nexus Venture Capital, and smaller shareholders are hopeful of a better-valued exit, and the co-founders Kunal Bahl and Rohit Bansal are hopeful of holding on to their company.

The clash of hopes is what has kept the ‘biggest consolidation in Indian e-commerce history’ from becoming a reality. After five months of discussions, the Snapdeal-Flipkart merger has turned into the most complex acquisition negotiation.

Stonewalling deal

In his last email to FreeCharge employees as the top boss, Bahl, buoyed by the sale of the mobile wallet to Axis Bank, said the deal provides them the necessary boost in resources to continue the journey towards building an e-commerce platform.

Axis Bank last week announced it had bought the mobile payments wallet provider from Snapdeal for Rs 385 crore ($60 million).

According to sources close to Snapdeal, the co-founders are actively working towards a ‘Plan B’ and have taken into confidence most of their senior management. According to sources, the two have been fighting SoftBank, the biggest investor in the company, ‘tooth and nail’ to prevent the deal from happening.

“They are going to fight the deal till they can. The kind of U-turn SoftBank took last year has left them flabbergasted. First SoftBank asked them to rebrand, spend money on marketing, promising all along that more investments are on way and then they suddenly left them high and dry.(more)


As Uber reels under crises, Ola in talks with Tencent to raise $400 mn

Ola is shoring up on investments as it dabbles with the idea of using electric cars as cabs

Indian Companies News : India’s largest taxi aggregator Ola is in talks to raise $400 million in fresh funding from Chinese Internet behemoth Tencent as it looks to quickly expand its service in the country at a time when its global rival Uber is reeling under multiple crises.

Ola is shoring up on investments as it dabbles with the idea of using electric cars as cabs and is increasingly relying on its in-house leasing unit to grow the base of partners on its platform. The company has raised close to $400 million in funding since November when Softbank led a $230 million investment in the company at a $3.5 billion valuation.

ALSO READ: Mr Gadkari, allowing driverless cars will generate more high-paying jobs

Sources told Business Standard that Ola was indeed in talks with Tencent but nothing had been finalised just yet. The Times of India and Economic Times newspapers first reported about the two parties being in talks on Thursday, citing sources that said the round would push Ola’s valuation to over $4 billion.

Globally, Tencent is part of the anti-Uber cartel through its backing of rivals such as Didi Chuxing in China, Lyft in the US, and Go-Jek in South East Asia. The company, in many cases, has invested alongside rival Alibaba and its close ally Softbank, which incidentally is the largest investor in Ola today.

At a time when Softbank is rumoured to be in talks to pick up a small but significant share in Uber, which is valued at $69 billion, it might make sense for Ola to bring in other strong investors. Ola is Softbank’s second-largest bet in India after e-commerce firm Snapdeal, which the Japanese investor is now pushing to sell to its rival Flipkart for a song.

ALSO READ: Snapdeal to seek shareholders view before giving final nod to Flipkart

UDAN scheme: TruJet to add 10 destinations with 7 aircraft

The airline started operations in July 2015, currently catering to 7 destinations with 16 flights

Hyderabad-based TruJet, one of the private airlines, which has bagged travel routes under UDAN (Ude Desh ka Aam Naagrik) scheme is planning to add 10 destinations with seven aircraft.

The airline started operations in July 2015 and is currently catering to seven destinations with 16 flights.

Antara Dey, spokesperson of the airline said that over the next two years, the airline is planning to add 10 destinations with seven aircraft. Of this, five will be under UDAN scheme, including Mysore, Bidar, Hosur, Salem and Vidya Nagar.

Alliance Air, the regional arm of Air India, SpiceJet and TruJet have won rights to operate flights under the government’s regional air connectivity scheme, which seeks to give people from Tier-II and Tier-III cities a chance to fly at a ticket price of Rs 2,500.

Company News : Airlines operating under the UDAN scheme have to ensure that the prices of at least 50 per cent of the seats on their flights are available at a price of Rs 2,500 each for an hour of flying.

The Centre and state will provide viability gap funding for the airlines operating on the UDAN routes to ensure profitability of these flights.

Trujet is planning to deploy ATR72-500/600 with a 72-seat capacity.

Dey, mentioned earlier, said that the airline is looking at 77 per cent PLF (passenger load factor) and expects to make money in a year.

She added that the airline is funded directly by promoters and do not have any plans immediately to look at external funding. (more)

Indian Companies News : Snapdeal sale still a few weeks away, board in discussion with others

Flipkart offer does not include Snapdeal’s three units in payments, logistics and e-commerce management

Flipkart has sent a second bid of $900 million to $950 million dollars to buy smaller e-commerce rival Snapdeal, sources privy to the information said.

The offer does not include Snapdeal’s three units in payments, logistics and e-commerce management. While the Snapdeal board is evaluating the Flipkart offer, it is also engaged in informal talks with two listed companies, sources said.

Sources said that the talks with these two companies are happening for Snapdeal as well as Vulcan Express as part of the package for little over $1 billion. Jasper Infotech, the parent of Snapdeal, also owns Freecharge, the digital payments firm, logistics arm Vulcan Express and Unicommerce, its e-commerce management firm.

Indian Companies News : “Flipkart has sent a second bid and this time closer to what Snapdeal board demanded. However, there are talks albeit informal happening with two other companies. They want to wait and see if that fructifies. We are still looking at few weeks before anything concrete happens,” said a source close to the board.

It has been more than four months since the talks began with Flipkart for the possible sale of Snapdeal. Softbank, the largest investor in the Kunal Bahl, Rohit Bansal founded company has been spearheading the discussions. While the Japanese telecom major spent weeks convincing other large investors Nexus Venture Partner and Kalaari Capital to come on board, the talks were then stuck after Flipkart sent the initial bid of close to $ 800 million. The board, however, wants to secure at least a billion dollars for Snapdeal which till last year commanded a valuation of $ 6.5 billion and was the direct and staunch competitor to Flipkart.

Till now Flipkart is the only contender that has sent a formal bid. However, the exclusivity deal with Snapdeal board has ended and the board is free to have discussions with other firms.

IT job cuts: Up to 600,000 engineers likely to be laid off in next 3 years

McKinsey & Company report says half of IT workforce will be irrelevant over the next 3-4 years

Executive search firm Head Hunters India said the job cuts in IT sector will be between 1.75 lakh and 2 lakh annually for next three years due to under-preparedness in adapting to newer technologies.

“Contrary to media reports of 56,000 IT professionals to lose jobs this year, the actual job cuts will be between 1.75 lakh and 2 lakh per year in next three years, due to under- preparedness in adapting to newer technologies,” Head Hunters India Founder-Chairman and MD K Lakshmikanth told PTI, analysing a report submitted by McKinsey & Company at the Nasscom India Leadership Forum on February 17.

McKinsey & Company report had said nearly half of the workforce in the IT services firms will be “irrelevant” over the next 3-4 years.

Also Read :

McKinsey India Managing Director Noshir Kaka had also said the bigger challenge ahead for the industry will be to retrain 50-60 per cent of the workforce as there will be a significant shift in technologies. The industry employs 3.9 million people and the majority of them have to be retrained.

“So, when we analyse these figures, it is clear that 30 to 40 per cent of the workforce cannot be retrained or re- skilled. So, assume that half of this workforce can continue to work on old skills, then balance will become redundant.

“So, the number of people who will become redundant in the next three years will be about five to six lakhs. This will workout to, on a average, between 1.75 lakh to 2 lakh per year for next three years,” Lakshmikanth explained. Read more