Prosus has scrapped the USD 4.7 billion acquisition of BillDesk it announced in 2021 saying ‘certain conditions’ were unfulfilled in a surprising move a month after the proposed acquisition received from the local antitrust watchdog the approval to proceed.
Representatives from Prosus explained that certain conditions precedent were not fulfilled by the 30 September 2022 long stop date, and the agreement has terminated automatically in accordance with its terms and, accordingly, the proposed transaction will not be implemented.
The all-cash acquisition, announced at the peak of the bull cycle in 2021, was slated to be one of the second largest M&A deal in the South Asian market’s consumer internet space. In recent quarters, as the market has turned, many promised deals have fallen apart globally.
The deal may have allowed Prosus, which already owns PayU, to dominate the market of payments processing in India. BillDesk powers payments for most of Indian government departments. At the time of the acquisition, Prosus said the high price tag was justified because of the scalability of the combined businesses.
Prosus indeed now believes the payments market in India has shown cracks in recent quarters and did not wish to go forward with honouring the 2021 arrangement, according to sources cited by TechCruch.
Prosus said there is no termination fee associated with the deal, meaning it believes it will walk away unscathed from the scene. The move to terminate the deal has come as a surprise to many direct stakeholders, including BillDesk founders and many of its investors commenting on the failure one of India’s biggest payments deal.
Several fintech founders were also shocked with the development, wondering what aspect broke the deal. Prosus said it ‘remains committed to the Indian market and growing its existing business within the region.’
BillDesk founders stood to make USD 500 million each from the acquisition deal. BillDesk, which counts Visa, Temasek, General Atlantic, and a number of Indian banks among its backers, has raised USD 245 million to date. It was valued at USD 1.59 billion after the January 2019 funding round, according to research firm Tracxn.
Prior to doing the deal with Prosus, BillDesk was internally planning to file for an initial public offering. PayU and 20-year-old BillDesk process a significant number of payments transactions in India. If combined, they would have commanded over 40% of the Indian market, more than that of their closest rival (Razorpay), according to industry estimates.
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