Snapdeal is in trouble and Paytm may play an important role to rescue the online eCommerce company. As per reports, Snapdeal is in talks with Paytm to merge with Paytm’s marketplace in an all-stock deal.
It is still not sure if this deal will finally happen. It depends on all stakeholders. The key player behind this deal is the Alibaba, the world’s largest e-commerce company that holds around 40% in Paytm and 3% in Snapdeal. The other important role player will be SoftBank that is the major investor in Snapdeal and also own the substantial stake in Alibaba.
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Since Paytm has a payment bank license, it has a deadline of March 31 to spin off its marketplace. The company has already spun-off its e-commerce business into a new entity called Paytm E-Commerce Pvt. Ltd. This sets the foundation for the merger.
This new deal is the result of Alibaba’s recent investment round of Rs 1,350-1,700 crore in the online retail marketplace of Paytm. This can also be seen as format entry of Alibaba in India. Now with the merger of Paytm’s marketplace and Snapdeal, there will be a bigger eCommerce player ready to compete with America’s Amazon and India’s Flipkart.
This development is still in early stage and will take few more weeks before we have a final decision from the company. It all depends on all stakeholders of companies. But, we see that the deal will be helpful for both Snapdeal and Paytm because these are not doing well in E-Commerce segment against Amazon and Flipkart.
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