In India, Son Set To Clash With Bezos In The Battle For Billions

Heading for a clash in India are Amazon.com Inc. founder Jeff Bezos and SoftBank Group Corp.’s Masayoshi Son.

According to people familiar with the matter, a stronger domestic player to compete with the American behemoth is being attempted to be created by SoftBank which is closing in on an agreement to combine its e-commerce company Snapdeal with market leader Flipkart Online Services Pvt. Soruces reportedly told the media that cutting down of Snapdeal’s valuation by 85 percent to $1 billion is also being planned by Son to get the merger done.

The sources said that SoftBank has argued the deal is necessary as venture funding dries up and competition intensifies even though Snapdeal’s founders and early investors had resisted such a steep cut. The sources said that a deal could be signed within weeks and the talks are now in the final stages.

Explaining he and co-founder Rohit Bansal are seeking to protect employees, in an email to employees over the weekend, Snapdeal co-founder and Chief Executive Officer Kunal Bahl raised the possibility of an acquisition.

“While our investors are driving the discussions around the way forward, I am reaching out to let you know that the well-being of the entire team is mine and Rohit’s top and only priority,” Bahl wrote, according to a copy obtained by Bloomberg.

There were no comments available from Flipkart, Snapdeal and SoftBank.

The sources said that with Son playing the role of matchmaker, the combination of India’s two leading e-commerce players is being called an arranged marriage. The Japanese billionaire plans to infuse another $500 million to $1 billion in Flipkart through a transaction with Flipkart backer Tiger Global Management and also plans to contribute to the merged entity the equity he owns in Snapdeal parent Jasper Infotech Pvt which is about its third.

And with that, in one of the world’s fastest growing online retail markets, Flipkart would have more firepower to battle Amazon. The India chief of the Seattle-based company Amit Agarwal has used a large of the $5 billion promised by the company to be spent in India to gain customers.

In China, Son won billion after he financed a similar battle. Alibaba Group Holdings Ltd., the e-commerce player that first defeated eBay in China and then successfully fended off Amazon, had Son as one of the earliest backers. giving him stock worth more than $80 billion, that investment remains one of his most successful to date.

And already raising cash for the battle is Flipkart. In what it said was the largest internet investment in India, the Bangalore-based company said Monday it had raised $1.4 billion from Tencent Holdings Ltd., Microsoft Corp. and EBay Inc. the company is now valued at $11.6 billion after the transaction, Flipkart said. While it’s not clear how easily those could be integrated, customers, scale and technology could be given to the business by an alliance among Flipkart, Snapdeal and EBay.

“This is a landmark deal for Flipkart and for India,” the company’s co-founders Sachin Bansal and Binny Bansal said in a statement. “This deal reaffirms our resolve to hasten the transformation of commerce in India through technology.”

(Adapted from Bloomberg)

 

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Categories: Economy & Finance, Strategy, Sustainability

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