Paytm and snapdeal will merge - Early Talks

News source - Gadget Now

 About a month back, exploratory talks had been held on merging Paytm's marketplace with Snapdeal in an all-stock transaction. People familiar with this development told ET that whether the deal will happen is not certain and that if all stakeholders agree, talks may resume again.

These people spoke off record, citing confidentiality issues and non-disclosure commitments. ET could not independently verify the complete contours and details of the discussion.

The key player here is Alibaba, the world's largest ecommerce company, which has a 40% stake in Paytm and around 3% in Snapdeal. Paytm has spun off the marketplace business into an entity called Paytm E-commerce Private Limited, which is raising capital from Alibaba and SAIF Partners.

In the event of a merger between Snapdeal and Paytm's marketplace, Alibaba will emerge as the new entity's largest shareholder, assuming no other big, new investor comes on the scene.

The other important player will be Japanese major SoftBank, which is a major investor in Snapdeal, and also has a substantial stake in Alibaba.

"Snapdeal and Paytm have held talks to merge and this deal is driven by Alibaba," said one person familiar with the matter. Paytm, which has a payments bank licence, has a deadline of March 31 to spin off its marketplace, as mandated by the Reserve Bank of india

According to another person with knowledge of the development, the recent capital infusion by Alibaba Group in Paytm's marketplace will also be a factor in any deal.

ET sent questions to all the companies concerned. In response to an email, SoftBank said, "We don't comment on speculation". Paytm did not respond to ET's questions. Snapdeal and Alibaba, in their responses, said no such transaction was being planned.