Softbank mulling a quick $1 bn Paytm-Snapdeal merger

The Dollar Business Bureau

Softbank, the largest investor in Snapdeal is exploring options for a merger with Paytm. Currently, the Alibaba group has a 40% stake in Paytm, with investments close to $1 billion, and Softbank was one of the early investors in Alibaba. Market-pundits averred that the deal could go in for an equity exchange in the value of $1 bn, which meant that an all-stock merger of Snapdeal with Paytm was more probable.

The Son led Softbank had earlier been mulling a possibility of a merger with Flipkart too. Conversations with the Bengaluru-headquartered Flipkart for strategic mergers have been in news for about three months now. There was also conversation with Tiger Global, the large investor in Flipkart, and trade analysts believe that Softbank could either end up merging with Flipkart as much as with Paytm.

Payments have been a lucrative option currently in the e-commerce sphere, and post the demonetization drive, customer engagement with Paytm as well as mobile app downloads have seen a considerable rise. Although officials from SoftBank did not confirm the news, it can be gauged that the Snapdeal merger with Paytm will enable it to gain access to India’s largest wallet.

Industry insiders too hinted that the Paytm merger could make more sense owing to the common synergies between the two entities. Paytm already has a $6bn valuation and a user-base of well above 200 million customers.

Besides the jostle, market watchers have also indicated that Softbank is looking to close the transaction as soon as possible, by suggesting Kalaari Capital and Nexus Venture partners to hasten a sale. Both firms own stakes in Snapdeal.