Alibaba gets second thoughts on investing in Micromax

BENGALURU: Alibaba Group Holding is rethinking plans to invest in Micromax Informatics. A potential deal valuing Micromax at about $3.5 billion has been put on “ventilator” because Daniel Zhang, who was appointed CEO of Alibaba in May, had second thoughts about investing in a hardware firm, according to two people familiar with the discussions.

“They were keener on the software services side of Micromax’s business. But that’s only a small portion,” said one person. Micromax did not reply to an email sent by ET. “We do not comment on market rumours as a matter of policy,” an Alibaba spokesperson said.

Moreover, there was a difference of opinion between Micromax’s promoters and chairman Sanjay Kapoor over strategy. Kapoor, formerly Bharti Airtel CEO for India and South Asia, resigned from Micromax in July, a little over a year after he had been appointed.

Micromax was to sell 20-26% of the company to Alibaba for about $700 million, ET reported in June. The deal was expected to close within a month.

Micromax has been bulking up its software business by investing in a string of startups. The company has earmarked $20 million to invest in about 20 startups this year.

On Wednesday, Micromax said it will invest in comparison platform Scandid, without disclosing the financial terms of the deal. The Scandid investment reinforces Micromax’s foray into application services and building an integrated mobile ecosystem, the company said. In June, it had invested in online travel search company Ixigo.

Micromax had a 17% share of the smartphones shipped to India in the second quarter of this year, according to International Data Corporation, behind Samsung, which had 23%. The Indian handset company is looking to expand its share in the sub-Rs 10,000 segment.

Micromax made a profit of Rs 284 crore on revenue of Rs 7,142 crore in the year ended March 2014, according to company filings.

Source by : timesofindia

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