Update: Flipkart has officially confirmed the acquisition of Letsbuy. and added that it is a combination of cash and equity. Flipkart co-Founder & CEO Sachin Bansal said that the acquisition opportunity came at a very attractive price. The exact amount of the deal has not been disclosed.
In a press statement, Flipkart said that the deal will allow for a faster rate of expansion for both companies – giving the combined entity a much larger share in the consumer electronics market.
The founders of Letsbuy along with their 350+ team will continue to function independently, but will be able to access Flipkart’s technology platform and supply chain capabilities. Letsbuy founder & CEO, Hitesh Dhingra said that the Company had a choice to raise a large round of funding as well, however aligning its business with the largest player in the market made sense.
Update: Our sources suggest that LetsBuy’s valuation was between $20-25 million. Another suggests that it is upwards of $25-30 million, depending on the payout.
Earlier today: Flipkart is set to buy LetsBuy.com, MediaNama had learned from multiple and reliable sources. The terms of the deal are not known, and at the time of filing this report, we’re awaiting a confirmation from Flipkart co-founder Binny Bansal. The deal is expected to be announced over the next couple of days.
Manish Vij, the co-founder of the Vun Network, and one of the early investors in Letsbuy declined to confirm or deny the development to MediaNama, saying that “LetsBuy is the second largest player in the country, and is the strongest competitior to Flipkart. From a comscore standpoint, it has 2 million unique and over 5 million visitors every month, and is among the top 4 commerce sites in the country. The company has options on raising funds as well, but is considering its options as of now.” Until recently, the rumor was that Flipkart was looking to buy a company in the luxury e-commerce space.
The buzz among the investor community has been that LetsBuy has been looking to raise money for a few months now, and in October 2011, there was a report in VCCircle, stating that that it was close to raising around $40 million from multiple investors including Sequoia Capital and Matrix Partners. It has been a little over a year since Letsbuy raised $6 million from Helion Ventures, Accel Partners and Tiger Global. Note that Flipkart and Letsbuy have common investors in Tiger Global and Accel Partners. LetsBuy was launched in July 2009, and primarily focused on retailing consumer electronics, communications and computer goods, though it expanded its product portfolio to include toys, sports, healthcare, watches and stationary. The company was founded by Hitesh Dhingra and Amanpreet Bajaj.
Flipkart is believed to have recently raised funds: a report in Mint suggested that the company had raised $150 million at a valuation of around $850 million. From what we hear, the LetsBuy acquisition might be a part-stock, part-cash deal. LetsBuy is believed to be doing around Rs 150 crore annually, while Sachin Bansal had told Mint that Flipkart is going to close this fiscal with revenues of Rs 500 crore.
To us, this acquisition would mark the beginning of a consolidation in the e-commerce space in India, which we’ve heard is struggling for consumer loyalty, but also perhaps give Flipkart a fillip in terms of scale, with two of the relatively larger players combining. To scale, e-commerce businesses would require substantive funds over the next couple of years, and not all companies may be able to raise that kind of funding. It’s going to be a last-man-standing game, and competition will increase particularly with the entry of Amazon.com in India. Size will matter.