Snapdeal Starts Due Diligence For ShopClues Buyout

Snapdeal moved a step closer to acquire smaller online retailer ShopClues as it began a thorough due diligence for the possible buyout, two people aware of the development told BloombergQuint.

The process started last week, the people said requesting anonymity as they aren’t authorised to speak to the media. EY has been hired to do the due diligence of the deal, one of the persons quoted above said. The final decision on the buyout will be taken after the due diligence, which is expected to complete in a month, the person said.

Snapdeal, which survived a near-closure two years ago, was in talks to buy the smaller peer in an all-stock deal. ShopClues is finding it difficult to raise funds and sustain in a market dominated by deep-pocketed Amazon and Flipkart with just about 35,000 orders a month. It had last raised $16 million from some of its existing shareholders in August.

Snapdeal, too, has been trying to strengthen its business by focusing on small, unbranded sellers in India’s retail market. It has about 5 lakh sellers on its platform and is shipping more than 2 lakh orders a day.

The talks for the buyout may have initiated as both these e-commerce companies have a common investor, Nexus Venture Partners, who’s looking at ways to save ShopClues, according to one of the persons quoted above.

Shopclues Co-Founder Sanjay Sethi could not be reached for a comment, while Snapdeal declined to comment on BloombergQuint’s emailed queries.