Till Monday evening, Snapdeal’s executives were under the assumption that they had almost closed the deal and would soon add Jabong- the online fashion retailer in their portfolio.
But, as they found out the next morning, the e-commerce website had been completely blindsided by Sachin and Binny Bansal’s Flipkart which swooped in and bought Jabong through its unit Myntra, for $70 million.
The reason for this, he said, was the fact that he did not find
Jabong has in the past being accused of not following the best practices. It was also alleged in the media that a former Jabong executive might have also made personal gains in company dealings.
Snapdeal was concerned about the reported irregularities as it didn’t want the company to be weighed down by them after it acquired Jabong.
And, thus Bahl’s team treaded cautiously. They were trying to seek answers from Jabong about the alleged corporate governance issues widely reported by the media and also analysing its business structure. Reportedly, Snapdeal’s legal team also sent over a list of conditions and to put it simply, closing the deal was taking time.
On Tuesday, right after news broke about Flipkart acquiring Jabong, Bahl wrote a note to the Snapdeal team and told them they had nothing to be discouraged about. His note also spoke about the realities of mergers and acquisitions (M&As).
“M&A is very exciting when you are doing it. The real work begins after that, and the surprises come after that. I am happy for the people who got all this cash for a company that has all these issues,” he wrote.
He now wants to spend the $100 million; the saved cash from not buying Jabong on building Snapdeal’s very own fashion business and create a unique experience by building a fashion-specific technology and supply chain.
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