It is official. Flipkart, the largest consumer focused e-commerce company in India, has acquired has acquired Myntra Designs Pvt Ltd, the company which runs the online fashion and apparel shop Myntra.com.
Although the transaction details have not been officially disclosed, news reports have pegged the deal value at Rs 2,000 crore (over $340 million) through a stock transaction. This would mean a sharp mark-up compared to Myntra's valuation in the latest funding round in February this year when it was valued at just under $200 million.
As part of the deal, Myntra's co-founder and CEO Mukesh Bansal will join Flipkart's board and will also head its fashion vertical. However, both the entities will remain independent.
The deal has been in the works for months now. According to The Times of India, which first reported the development, the proposed deal was seen as an alternative to Myntra's fresh fundraising. Myntra went on to raise $50 million more. VCCircle had first reported on March 28 that the deal is still on track.
The deal was championed by two of the three common investors of the two e-tailers Accel Partners and Tiger Global. Belgium's Sofina is the third common investor.
However, the talks had reportedly hit a roadblock after Myntra wanted to operate independent of Flipkart post-merger, and also wanted a cash infusion of $150 million into the company.
"This is a 100 per cent acquisition of Myntra. We can't share any more details. This acquisition is for scale, not for cost," said Flipkart's co-founder and CEO Sachin Bansal.
He added that the firm will invest over $100 million in the near future in the fashion business to further scale up both Myntra and Flipkart.
"This partnership will strengthen both our positions in the fashion space. We will continue to work as independent entities and grow together as leaders in the Indian fashion and lifestyle industry," said Flipkart's co-founder Binny Bansal.
"It is important for us to continue to run this as separate entities. I see myself here for many many years. We feel that this is an opportunity to accelerate our road map," said Mukesh Bansal. He was earlier said to be opposed to the idea of the deal with Flipkart.
"Sachin, Binny and their team have built a pioneering e-commerce platform on a foundation of strong technology and customer centricity. Flipkart is the most powerful e-commerce brand in India and has a very ambitious agenda to build the next generation of retail in India. Leveraging mutual strengths, we will build Myntra into India's leading fashion powerhouse and create many original fashion brands," he added.
Asked how he would differentiate the fashion apparel business of Myntra and Flipkart as the head of the overall fashion business, Mukesh told Techcircle.in. "The way I look at it is that our consumers will be able to find all the products in all the categories at all the price points. We will continue to expand our portfolio and add more brands to Flipkart. We will also add Myntra's original brands to Flipkart. Myntra will look to provide a good fashion experience to our consumers."