Indian E-commerce Skyrockets As Flipkart Purchases Myntra.
India’s largest e-commerce firm, Flipkart India, is acquiring rival Myntra.com in one of the largest-ever deals in the rapidly-growing Internet business, as Flipkart seeks to extend its lead over rivals and boost its valuation ahead of a potential initial public offering.
While the companies have not disclosed the amount behind the merger during the media briefing that was hold on Thursday, the long-awaited cash-and-stock deal will most likely to be valued online fashion retailer Myntra at more than $330 million, one person who is close to this matter stated, requesting anonymity.
Myntra had made it their main objective of generating Rs.20,000 crore in gross sales by the year of 2020, for which the site would need more than $200 million in cash, co-founder and chief executive Mukesh Bansal stated.
Bansel will become head of the fashion Business for both Myntra and Flipkart, and Mytra shall operate as an independent entity and retain its website, while Flipkart shall continue selling its apparel on its site.
Flipkart’s acquisition of Myntra will help the company gain a better chance in competing against Amazon India, Snapdeal and other’s as well as providing Myntra access to a significantly larger amount of funds. Flipkart’s and Myntra’s common investor Tiger Global Management, Accel Partner and Sofina Capital will receive more shares within the merged entity.
Tiger Global and Accel Partner first proposed the deal during the previous year, partly in response to aggressive moves being made by Amazon’s India branch to grab hold of a larger market share in the country. Flipkart’s founder Binny Bansal, and Sachin Bansal, and Myntra co-founder and cheif executive Mukesh Bansel, gave their approval of the deal earlier in the year.
The deal between Flipkart and Myntra comes around just as strong revival of interest in India’s e-commerce business. which has been valued to total around $3.1 billion, excluding travel services and tickets, according to report done by the CLSA’s in November.
Snapdeal had manage to raise a total of $100 million during Wednesday, mainly from its new investors which included Temasek Holding, BlackRock, and Preji Invest, less than three months after it manage to receive as much as $133.7 million of funding.
Flipkart has manage to gain a total of $560 million in funding since its launching back in 2007, and has also been in discussion on raising another round of funding. The company has manage to raise to total of $360 million. Flipkart’s valuation has soared up to $2-2.5 billion following this recent deal with Myntra, stated the person who is close to this matter, and chose to stay anonymous.