BENGALURU — Online marketplace Snapdeal.com said on Wednesday it bought online mobile recharge firm Freecharge for an undisclosed amount in a bid to boost its reach in the fast-growing mobile transactions business.
The terms of the deal were not disclosed. Speculation about the deal had been reported since March, and the price was pegged at $450 million (Rs 2,800 crore). This acquisition continues consolidation in a sector that has seen high valuations along with big losses at companies trying to lure buyers with hefty discounts.
Snapdeal, backed by SoftBank Corp, competes with Flipkart and Amazon.com Inc's India unit in the country's online shopping market, which is expected to be worth $102 billion by 2020, according to Morgan Stanley.
Easy availability of smartphones and cheap data plans have resulted in most of those transactions to be made via apps, where consumers use their mobile phones for everything from buying clothes to booking movie tickets. Freecharge allows users to top up amounts on their mobile phone or internet connections and get coupons as reward for using its service.
Snapdeal Chief Executive Kunal Bahl said 1 million mobile transactions would take place daily once the companies are combined. About 75 percent of all Snapdeal transactions now are through mobile users, he said. “Ninety per cent of Internet users in India within the next few years will be mobile only. It becomes very important to have a very strong mobile commerce strategy," said Bahl.
Freecharge would remain an independent platform even after the deal, which is expected to close within the next 6 months, Bahl said. This would make Snapdeal the largest mobile commerce company in India, Snapdeal said in a statement.
Snapdeal also took to Twitter to announce the deal.
@snapdeal Umm...what?— FreeCharge (@FreeCharge) April 8, 2015
.@snapdeal Dear god!! I will, I will. it's a deal :)— FreeCharge (@FreeCharge) April 8, 2015
(With agency inputs)