Update: It’s official, Flipkart has bought Myntra. Myntra founder Mukesh Bansal will join Flipkart board. Both entities will remain independent.
– Mukesh Bansal will be joining Flipkart board and head fashion vertical.
– Both the companies will continue to work separately.
– Flipkart will be investing upward of $100M in Myntra.
– Post acquisition, Myntra and Flipkart will account for 50% marketshare in Fashion.
– All Myntra employees get Esops which will now be converted to Flipkart stock.
– Financial terms of the deal were not disclosed.
Medianama has also heard the same from sources and from what we’ve heard, the deal is expected to be announced on Thursday. When contacted by Medianama, both Myntra and Flipkart spokespersons declined to comment.
The report says the deal will be a combination of cash and stock, although the exact deal size is not clear yet. A Mint report pegs the deal at $330 million while a NextBigWhat report pegs the deal to be over $250 million. Both Flipkart and Myntra will also apparently operate as separate entities, which was one of key demands of Myntra CEO Mukesh Bansal.
This development finally ends months of speculation on whether Flipkart is buying Myntra or not. Times of India had first reported about the possible merger between both the companies in January this year, while Myntra was in talks to raise $50 million investment from Azim Premji’s Premji Invest and others. However, Myntra went ahead and opted for the $50 million investment in the following month.
The merger talks picked up again in March this year with common investors Accel Partners and Tiger Global reportedly pushing for the deal. However, Subrata Mitra, a partner at Accel Partners told the Wall Street Journal last month that discussions had stalled over disagreement on the status of Myntra following the acquisition.
Myntra CEO Mukesh Bansal was apparently looking for a guarantee that it can operate independently of Flipkart and also receive a cash infusion of around $150 million while everyone else wanted the companies to pool in resources to put up a fight against its competitors Amazon India and eBay-backed Snapdeal.
Why is this deal important: This acquisition will help Flipkart gain a significant upper-hand in the fashion and accessory segment, which seems to be one of the fastest growing verticals for e-commerce sites.
Last October, Flipkart CEO Sachin Bansal had mentioned that fashion category was a key focus for the company going forward and it was hoping to become a leader in the fashion category by last Diwali. While the company has been strengthening its fashion category through new product categories and private labels over the last year, it was unable to surpass Myntra which continues to be the market leader in India.
This competition is only going to get more fierce in the future, with Amazon India entering the apparel segment by launching women’s ethnic wear section last month and Snapdeal focusing on fashion & lifestyle product sales. Besides this, there is also Rocket Internet-backed online fashion and lifestyle store Jabong which had recently closed a “multi-hundred million dollar” investment, of which $27.5 million was invested by UK’s development finance institution CDC Group plc.