How eBay almost became part of Snapdeal last year

eBay India became a part of Flipkart when it announced largest fund-raising at $1.4 billion

One year is a long time in the e-commerce universe, often seen as running on steroids. American online marketplace eBay’s tryst with domestic players captures the spirit of the industry ahead of the biggest e-commerce deal in the country between Flipkart and Snapdeal. Investors are flying across the globe from Silicon Valley to Bengaluru, Tokyo to Gurugram, and in and out of boardrooms and swish hotels for the deal. 

As a precursor to that deal, likely to be made public sometime this month, eBay India became a part of Flipkart when it announced the largest fund-raising at $1.4 billion a few days ago. But sources in the investor community have a story to tell about how eBay had a similar rendezvous with Kunal Bahl-led Snapdeal last summer. While marquee investors are at the centre of Flipkart’s merger with Snapdeal as well as the recent eBay deal, the same happened last year too, according to sources.      

Those were the days when Nikesh Arora as president and COO of SoftBank, a top Japanese telecom and internet corporation, was calling the shots for India businesses. Snapdeal was among the investing giant’s prized asset, and San Jose-based eBay was on the deal table with Kunal Bahl-led company. Sometime in May 2016, Arora and Devin Wenig, president and CEO of eBay Inc had finalised an agreement that the American marketplace would invest around $400 million in Snapdeal. 

At that point, Snapdeal was valued at around $5 billion, sources said. (One year later, Snapdeal is being valued at lower than $1 billion as investors led by SoftBank are pushing for a deal with Flipkart). The term sheet of the deal last year made it clear that eBay’s India unit was to come under Snapdeal, where Masayoshi Son-led Softbank is a majority investor.

Arora quit SoftBank in June 2016. Around the same time, the eBay term sheet lost currency, another source confirmed to Business Standard. It is believed that eBay waited for a couple of months but decided to scout for another partner eventually. There’s no evidence to link Arora’s exit and eBay-Snapdeal deal falling through, but the investor community is recalling the events of last year as eBay made headlines earlier this week after signing a similar deal with Snapdeal's bigger rival Flipkart. eBay already has 5 per cent stake in Snapdeal. 

“As a policy, eBay does not comment on its investment strategy and decisions,’’  spokesperson of eBay India said. Snapdeal, too, refused to comment on the issue. 

Even as Snapdeal is left with just a few days in its present form, the Gurugram-based firm is learnt to have given out increments ranging from 10 to 20 per cent to its employees this week. The company, which has cut down its expenses and the burn rate over the last few months, has consolidated its office space too, an executive said. But all that may not come handy any longer as another deal term sheet is in the making in some part of the world at this point.