Snapdeal acquires FreeCharge for cash and stock – have greater say in mobile commerce. Yes Snapdeal second acquisition for the year for Rs.2, 800 crores ($450 million). This is one of the biggest acquisitions in Indian market after acquisition of Myntra.com by Flipkart. With this Snapdeal becomes the largest mobile commerce company in India.
The deal works out to be about 40% cash and rest in stock for FreeCharge promoters. FreeCharge founded in 2010 by serial entrepreneur Kunal Shah and Sandeep Tandon backed by Sequoia Capital and Valiant Capital along with Hong Kong based Tybourne Capital Management. Tybourne has invested in Snapdeal too.
Flush with funds of $627 million funding round in October 2014 for Snapdeal and FreeCharge has raised $80 million in February 2015 with cumulative funding of $120 million for the company.
The acquisition will not affect the consumer immediately. Both entities continue work in the same way they are. However it has caused ripples in the Indian internet industry. FreeCharge will continue to function as an independent platform and no changes will be made in shopping experience. All the employees of FreeCharge will continue working with the company. Combined user based of Snapdeal and FreeCharge will 40 million and a total of 30 million app downloads.
Its advantage for FreeCharge which competes with PayTM that runs e commerce marketplace in terms of customer acquisition. FreeCharge was lacking all these days. FreeCharge’s couponing and advertisement platform will provide Snapdeal sellers another avenue to advertise themselves to the FreeCharge customers. Even Flipkart is thinking on the lines of shutting down its mobile website and divert the traffic the users towards Flipkart App.