Acquisitions of Indian Startups by its Competitor
startup
What do you mean by the term Acquisitions? On what metrics the company acquires other companies? Is acquiring other competitor companies legal? Which are some of the latest acquired companies? Interesting isn't it?
According to Investopedia, the definition of Acquisitions is as follows-
An acquisition is when one company purchases most or all of another company's shares to gain control of that company.
Acquisitions, which are very common in business, may occur with the target company's approval, or in spite of its disapproval. Some of the parameters needed to be checked before acquiring a company. These metrics should be followed before evaluating an acquisition- Financial value of the company, Asset value of the company, Possible resale value of the company, and its assets.
Read this article to know more about the common questions related to startup acquisitions. We have listed down some of the latest and deal-breaking acquisitions in the Indian Startup Ecosystem.
Top Indian Startup Acquisitions
1. Walmart acquires Flipkart
2. Snapdeal acquires FreeCharge
3. Tata motors acquire Jaguar and Land Rover
4. Flipkart acquires Myntra
5. Ola acquires TaxiForSure
6. Zomato acquires Urbanspoon
7. MakeMyTrip acquires MyGola
FAQ's
Conclusion
Jeenal Jain
Top Indian Startup Acquisitions
India, the 3rd largest startup hub in the world is home to many new startups. Every other day we hear about new startups coming up in India. With all these new startups coming up every other day, the competition increases. This leads to acquisitions. The strong prey on the weak or the potential competitor. Recently, the Walmart-Flipkart merger in mid-2018 is the first breakthrough in the minds of many. From a country's M&As (mergers & acquisitions) viewpoint, this acquisition has been a milestone and still has an ecosystem impact. If the sale was the horse rider or the fact that the ecosystem was more M&A safeguarded, the overall fusions and acquisitions this year have decreased.
As we approach the mid of 2021, there are sudden reports of potential acquisitions and exits in the Indian startup ecosystem. Some of India's largest startups have made many acquisitions to grow their footprint, grab a larger market share or endure growing competition from competitors, including Tata Motors, Zomato, Snapdeal, Flipkart, and others.
1. Walmart acquires Flipkart
With the American retail giant investing 16 billion worth, Walmart's takeover of Flipkart is the first-ever in India. But this acquisition was not the country's first major takeover we saw. Here is a list of some of India's major fusions and acquisitions. In 2018, Walmart purchased Flipkart 77 percent for $16 billion. This makes it India's largest acquisition.
Sarika Anand
2. Snapdeal acquires FreeCharge
In April 2015, Snapdeal acquired the Freecharge smartphone recharge service. It was valued at $400 million for the cash plus equity deal and the largest takeover in Indian internet business history. The partnership brought in about approx. $1.1 billion in financing from Snapdeal, and $120 million from Freecharge in particular. Freecharge remained a separate company after the takeover, allowing Snapdeal to grow its digital trading ecosystem. Snapdeal has had several major acquisitions last year: In the center of this move, China's giant Alibaba took an interest in Indian eCommerce in Snapdeal.
Megha Rani
3. Tata motors acquire Jaguar and Land Rover
As announced on March 26th, Tata Motors purchased the Ford Motor Company's Jaguar Land Rover companies from the company for a net amount of $2.3 billion. In the Jaguar Land Rover pension plans, Ford contributed around US$600 million. Mr. Ratan N. Tata, Chief Operating Officer of the Tata Sons and the Chief Financial Officer of the Ford Motor Group, Don Leclair and Mr. Lewis Booth, Executive Vice-Chairman of the Ford of Europe Motor Company and Mr. La Jaguar La Tata Motors attended this ceremony at the Gaydon headquarters at the Jaguar Land Rover.
Devashish Shrivastava
4. Flipkart acquires Myntra
In May 2014, after months of rumors, India's leading e-commerce company Flipkart acquired a trendy rival Myntra, a development that had to do with the increasing presence of Amazon in India. None of the parties verified the acquisition's exact valuation, but sources placed the cash and equity transaction between 300 and 330 million dollars.
Flipkart launched as a supermarket in 2007, offering apparel and electronics in all categories. It also offers furnishings and white products. The change is anticipated to help Flipkart reinforce its clothes collection and contend with Amazon and Snapdeal more vigorously. With his co-founder and CEO Mukesh Bansal joining Flipkart and running the apparel company, Myntra will continue to run as an autonomous entity.
Megha Rani
5. Ola acquires TaxiForSure
Ola, one of India's largest ride-hailing operation, acquired TaxiForSure for $200 million as a smaller, but value-centric, cash and equity acquisition in March 2015. Ola's footprint in the country has been extended by adding TaxiForSure's 15,000+ fleet onto its network across 47 cities. In October 2014, Ola raised SoftBank $210 million in addition to the 41,5 million dollars it raised earlier, adding over a quarter-billion dollars in overall financing in 2014. When TaxiForSure was acquired, it had 15,000 vehicles in 47 cities on our network a few months after the launch of Ola in January 2011. In India, it has recently been an upright battle between Uber and Ola, who have joined Didi Kuaidi, GrabTaxi, and Lyft globally.
Shubham Kumar
6. Zomato acquires Urbanspoon
In January 2015, Zomato purchased a 50 million dollar US competitor, Urbanspoon, at what was one of the highest offshore transactions for an Indian startup. The purchase marked Zomato's visit to the US, Canada which Australia, and took over 22 countries around the world. The takeover signals the entrance of Zomato in the USA. This is the sixth and largest purchase of Zomato in the last six months. The purchase will rise from 300,000 to 1.000,000 restaurants globally more than three times the inventory of Zomato's Restaurant. In the coming months, Urbanspoon will pass onto Zomato.com, and the Zomato software will be used by all Urbanspoon app users. Zomato increased the overall amount of venture funds raised by the firm to $113 million from Sequoia, Knowledge Edge, and Vy Capital in November.
Rishabh Rathi
7. MakeMyTrip acquires MyGola
A leader among India's travel reservation sides was the Nasdaq-listed MakeMyTrip, a pioneer in Indian tourism reservation – which was funded by investors such as Helion Venture Partner, 500 Partners, and Blumberg Capital at the last minute. Mygola, founded by IIT Mumbai in 2009, says travelers can create customs journeys in 15 minutes by using Bapna and Prateek Sharma. It has up to 5000 installations in the Google Playstore on Android and is present in 16 cities worldwide. The acquisition happens as Indian travel is heating up, as an investment in 2015, for the most part, early-stage, has crossed 71 million dollars, compared to 55 million dollars in all of 2014 (about 440 crores).
Shubham Kumar
FAQ's
Let's discuss some of the frequently asked questions (FAQ's) related to startup ecosystem..
What do you mean by the term Acquisitions?
An acquisition is when one company purchases most or all of another company's shares to gain control of that company. Acquisitions, which are very common in business, may occur with the target company's approval, or in spite of its disapproval.
On what metrics the company acquires other companies?
These metrics should be followed before evaluating an acquisition- Financial value of the company, Asset value of the company, Possible resale value of the company, and its assets.
Is acquiring other competitor companies legal?
Acquisitions, which are very common in business, may occur with the target company's approval, or in spite of its disapproval.
Which are some of the latest acquired companies?
Larsen and Toubro Ltd (L&T) gained a controlling interest in Mindtree Ltd, raising its stake to 60% in the Bengaluru-based company on 27 June 2019 and successfully concluding India’s first hostile takeover of an IT company.
How do startups get acquired?
The startups that last usually get acquired for their market share before they hit those numbers. Intellectual property is the most common way to build a defensible product. In fact, many startups with a proprietary product get acquired before they even take their solution to the market.
How long does a startup acquisition take?
Corporate mergers and acquisitions can vary considerably in the time they take to be completed. This length of time may span from six months to several years. There are a number of individual steps that need to be completed successfully by two public companies before they are legally combined into a single entity.
Conclusion
Startup acquisitions happened in the past and will keep happening in the future. If there is a slight possibility that the competitor can be a problem in a long run then acquisitions will happen for sure. Investors will keep looking for further IPOs, new firms and acquisitions from publicly traded companies in the subsequent year as the number of acquisitions, and their scale in India is growing. Up until now, they have relied primarily on other startup acquisitions. As the Indian startup ecosystem continues to expand and draw more foreign interest, the value of M&A transactions in the country can only be projected to rise in the coming years accordingly.
Devashish Shrivastava
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