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SoftBank engineers integration of India's Snapdeal, Flipkart

Japanese tech giant eyes 20% interest in envisioned challenger to Amazon

Flipkart and Snapdeal dominated India's e-commerce industry until Amazon.com entered the fray in 2013, pushing Snapdeal down to No. 3.   © Getty Images

TOKYO -- SoftBank Group has reached a broad agreement to combine Flipkart, India's top e-commerce company, with third-ranked Snapdeal to more effectively take on rapidly encroaching American titan Amazon.com.

The Japanese telecommunications company, Snapdeal's top shareholder, has been holding talks with Flipkart investors Microsoft, eBay and Tencent Holdings. Looking to own 20% of the combined entity, SoftBank plans to put in more money via its massive joint investment fund.

Flipkart and Snapdeal, which entered the Indian e-commerce market in 2007 and 2010, had maintained a duopoly until Amazon stormed into the country in 2013. Snapdeal dropped to third place.

SoftBank sank $627 million into Snapdeal's parent company under a deal announced in 2014 and has since ratcheted up its investment. The Japanese company hopes that integrating Snapdeal with Flipkart will give Amazon stiffer competition.

Cash has been the dominant payment method in India. But last November's demonetization of 500 rupee and 1,000 rupee ($7.76 and $15.52) notes -- more than 80% of the paper money then in circulation in value terms -- helped e-commerce make significant strides.

The nation's online retail market swelled from $3.8 billion in 2009 to $23 billion in 2015, data from the Japan External Trade Organization shows. It is expected to surpass $100 billion in 2020.

SoftBank Chairman and CEO Masayoshi Son told Prime Minister Narendra Modi in 2014 that the company would invest $10 billion in India over the following decade. In addition to Snapdeal, SoftBank has also invested in OYO Rooms, which operates a service for booking budget hotels, and the operator of the Ola ride-hailing app.

(Nikkei)

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