Snapdeal, which survived a near-closure two years ago, is in initial talks to buy smaller online retailer ShopClues in an all-stock deal, according to two people privy to the development.
Gurugram-based ShopClues reached out to Snapdeal to explore a possible buyout, one of the persons quoted above said requesting anonymity as the talks are private. Founders are trying to save the firm as it has not been able to raise funds since August, the person said.
Sanjay Sethi, founder of ShopClues, in a text message to BloombergQuint said, “There's nothing to it (the deal).” Snapdeal wasn't immediately available for a comment. Entrackr first reported on the merger talks.
ShopClues is struggling in a market dominated by deep-pocketed Amazon and Flipkart with just about 35,000 orders a month, a fraction of what its larger peers get. Snapdeal, which shed flab to survive after a failed merger with Flipkart, is trying to strengthen business by focusing on small, unbranded sellers in India's retail market that, according to Deloitte India and Retailers Association of India, is estimated to nearly grow threefold to $84 billion in four years through 2021.
Discussions with Snapdeal started after ShopClues was unable to raise funds from an external investor by the end of last year—it last raised $16 million from some of its existing shareholders in August. Investors had pooled in funds to give the online retailer enough time to raise fresh capital by Diwali, the person said.
Investors, including Nexus Ventures that has backed both the online retailers, are looking at ways to save ShopClues from going down. If the deal materialises, there will be no cash involved and all the existing investors of ShopClues will get a share in the combined entity, the person quoted earlier said.
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