business

Updated: May 06, 2017 17:01 IST

Japan’s SoftBank is pushing for a possible merger between ecommerce majors Flipkart and Snapdeal next month, potentially laying the foundation for the biggest consolidation in the bleeding domestic e-retail market.

A report in the Times of India on Tuesday quoted sources as saying that Softbank was likely to invest $1.5 billion in the merged firm – a stake of around 15%.

Flipkart is the market leader in the ecommerce sector but a better-financed international rival, Amazon, is breathing down its neck. Indian Snapdeal has struggled to keep pace and is currently third.

The Indian ecommerce sector has seen explosive growth in recent years, riding on growing internet usage and more customers willing to transact online. But deep discounts and all-season offers to lure more people online has left companies crushed under huge losses.

If the merger goes through, the new entity would be the primary competitor to Amazon.

SoftBank is learnt to have drawn up three options for Snapdeal- merge with Flipkart, combine with Alibaba-led Paytm, or a writedown of SoftBank’s investment to zero, the Times of India reported. The Japanese giant is the leading investor in Snapdeal.

On March 22, Livemint had reported that Snapdeal is in preliminary talks with two of its biggest rivals—Paytm E-Commerce Pvt. Ltd and Flipkart India—for a potential sale.

Both Snapdeal and Softbank refused comment while Flipkart told the Times of India that any merger speculation was “false and baseless”.

The news comes days after Flipkart raised $1 billion from China’s Tencents and Microsoft. The company was also in talks to raise another $1 billion, said reports.

Discussions of the merger gathered pace in the last fortnight with SoftBank founder Masayoshi Son directly involved, the newspaper said. Domestic players are fighting for market share with Amazon, which has announced a multi-billion dollar war chest for its Indian business, while Chinese giant Alibaba is preparing to enter India in a joint venture with Paytm Mall, One97’s physical goods marketplace.