HomeNewsPaytm to acquire Freecharge, signs a non-exclusive term sheet

Paytm to acquire Freecharge, signs a non-exclusive term sheet

The Alibaba-backed Paytm has now signed a non-exclusive term sheet for a potential acquisition of Freecharge from its current owner - Snapdeal.

Post demonetisation, the digital payment saga took a massive hike and one of the better beneficiaries of it was ‘Paytm’. Interestingly, the Alibaba-backed Paytm has now signed a non-exclusive term sheet for a potential acquisition of Freecharge from its current owner – Snapdeal.

Over the course of next few weeks, Paytm will begin the due diligence of Freecharge where it will compute the actual value of the company. If all goes well, the transaction is touted to lie between $45 million to $90 million. This is way less than what ($400 million) Snapdeal paid for back in 2015. Previously, Freecharge was to be valued around $150 million but no buyer was ready to agree on a deal at that price.

An ET report claims that the deal is in final stages and might be finalised in the coming month. Further, Paytm is looking to raise up to $1.9 billion from Softbank making it one of the biggest startup fundings in India.

Before Paytm, Freecharge was said to have in talks with global players like PayPal along with domestic players like MobiKwik. However, recent reports have now suggested that MobiKwik is out of the race while a couple of domestic banks and private equity firms have shown interest in the deal. Interestingly, post signing the term sheet, Freecharge is to have open talks with PayPal again.

One of the major reasons for Freecharge’s fall was how Snapdeal was recently thrown down to the ground from the likes of Flipkart and especially after Amazon entered the Indian e-commerce market. Which is why Softbank, which is the largest stakeholder in Snapdeal is also planning to let go the e-commerce portal to its arch rival – Flipkart – for a possible deal of $750 million which is less than $1 billion tipped earlier.

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