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The deal is reported to be worth US$30-40 million; a low number, but it could be a necessary shot in the arm
In what could potentially be its first major move since its US$1 billion acquisition by Alibaba, the fashion e-commerce platform Lazada is reportedly in talks to buy Singapore’s RedMart for US$30-40 million, this according to a report from TechCrunch today.
A source told Jon Russell, who broke the story, that the deal could officially be announced as early as next week.
Redmart has been seeking buyers for months now for a company that paved the way for the food delivery industry in Singapore, but has been struggling recently.
According to a tweet from Russell, Amazon approached Redmart about a potential acquisition but it was deemed “cheeky”.
Amazon apparently made a cheeky bid for Redmart earlier this year, hinting that it may well have plans to enter SE Asia soon
— Jon Russell (@jonrussell) October 28, 2016
There were, it seems, other deals on the table (TechCrunch cites the supermarket NTUC and a Singaporean sovereign wealth fund named GIC), but one reportedly has legs.
The company has raised US$55 million from investors like Garena, LionRock Capital, Far East Ventures and Facebook Co-founder Eduardo Saverin.
The company raised US$26.7 million in a round last year, so selling for the reported US$30 to US$40 million would be a low number for the company.
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However, the reported deal does not necessarily signify a ‘fail’ for RedMart. Alibaba, who now controls Lazada, has a track record of promoting autonomy amongst its portfolio companies. Paytm, Lazada, Ant Financial and Cainiao are all Alibaba properties, but they have also found significant success operating as pseudo-independent businesses.
Furthermore, while a pioneer, RedMart is struggling to adapt to both local competition (honestbee) as well as startups that are establishing a presence in markets more lucrative than Singapore (HappyFresh). A backing from Alibaba could be the shot-in-the-arm the company needs to compete in 2016.
About a month ago, Jack Ma explicitly said Alibaba would invest more in Southeast Asia.
“Alibaba will expand investment and business development in the ASEAN region,”he said.
And while, when he said those words, it is easy to infer he meant direct investment from Alibaba Group, a potential Lazada deal for RedMart would fulfill the mandate.
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