Flipkart, Myntra finalise biggest merger in India's e-retail sector
22 May 2014
In the biggest M&A deal seen in the Indian e-commerce space, leading e-retailer Flipkart has completed its acquisition of online fashion and lifestyle products retailer Myntra in a deal estimated by the market to be worth up to Rs2,000 crore, though the two companies did not divulge financial details.
"As both the companies are privately held, they have decided not to disclose the deal value," a Flipkart spokesperson reportedly said.
Flipkart co-founder and chief executive Sachin Bansal told reporters in Bangalore, "It is a 100 per cent acquisition and going forward, we have big plans in this segment. Flipkart and Myntra are getting together to create one of the largest e-commerce stories and together we will dominate the market,"
Bansal said Flipkart will invest $100 million (around Rs 600 crore) in its fashion business in the near-term.
Flipkart, which started in 2007 as an online bookstore, now sells products across categories, including fashion and electronics. It also sells white goods and furniture. The move is expected to help Flipkart strengthen its apparel portfolio and compete more aggressively with compeers like Amazon and Snapdeal in an increasingly crowded market.
Myntra will continue to operate as a separate entity, with its co-founder and chief executive Mukesh Bansal joining the Flipkart board and heading the fashion business.
"It was very essential to keep Myntra a separate entity and preserve its culture. I'm here for the long haul and we will continue to grow in the market," Bansal said.
India's e-commerce market has seen huge growth in the past few years as more people log on to the Internet to shop. While apparel and electronics are bestsellers for most e-commerce firms, categories such as home decor and household items are also popular. The industry, estimated to be worth about $3 billion currently, has firms such as Snapdeal, eBay and Amazon which follow the marketplace model.
Fuelled by increasing internet penetration and youngsters shopping online, Flipkart's annualised sales crossed $1 billion (over Rs6,100 crore) a year ahead of target. It had estimated to reach the billion dollar mark for gross merchandise value by 2015.
Flipkart, which also operates under the marketplace model allowing retailers to offer products on its platform, has since its inception raised over $500 million from investors.
The Bangalore-based firm, founded by Sachin Bansal and Binny Bansal, counts Naspers, Tiger Global, Accel Partners, Dragoneer, Morgan Stanley, Sofina and Vulcan Capital among its investors. Last year, Flipkart raised $360 million from private equity firms, one of the largest funding deals in the Indian e-commerce space.
Myntra sells products from over 650 brands like Nike, HRX by Hrithik Roshan, Biba and Steve Madden and clocked revenue of about Rs 1,000 crore in the previous financial year.
It aims to double its revenue in this financial year as it expands its seller base and adds products. Myntra has about 100 sellers on board and plans to increase this number to 1,000 by fiscal end.