leading e-retailer Flipkart on Thursday acquired online clothing seller Myntra Designs for an estimated Rs2,000 crore, in a deal that would give Flipkart control of roughly half of nation’s e-commerce market by sales.
Flipkart said Myntra’s chief executive Mukesh Bansal will head the combined company’s fashion division and have a seat on the company’s board.
While the two companies did not disclose the financial terms, the deal is believed to have valued Myntra at about $330 million and its shareholders will get a combination of cash payouts and stakes in Flipkart.
The acquisition gives seven-year-old Flipkart, set up by two ex-Amazon employees in 2007, access to Myntra’s customers and suppliers for a stronger foothold in the fast-growing online fashion market that has giants like EBay and Amazon sprawling.
India’s internet retail market is estimated to expand sevenfold to $22 billion by 2018 from current $3 billion. Flipkart had a 4.9 per cent share in 2013 while Myntra controlled a 4.1 per cent share. Amazon and EBay had 1.6 per cent and 1.2 per cent market share respectively.
“This acquisition helps us grab a bigger market share and compete better,” Flipkart co-founder Binny Bansal said adding the company will invest $100 million in the fashion business in the “near future.”
Bangalore-based Flipkart, which is popular for selling books and electronics online, hit the $1 billion gross merchandise value (GMV) mark in March this year, a year earlier than the company expected.
Myntra, which sells products from over 650 brands like Adidas, Calvin Klein and levis, has a GMV of about $204 million.
Both companies will be run independently.
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 investorslast year, Flipkart raised USD 360 million from privateequity 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 Rs1,000 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.