Flipkart, India’s largest e-commerce firm, is buying rival Myntra,which specializes in fashion and casual lifestyle products in the largest-ever deal in the fast-growing Internet business, as Flipkart seeks to extend its lead over rivals and boost its valuation ahead of a potential initial public offering.
Though the companies didn’t disclose the merger amount at a media briefing held on Thursday, the long-awaited cash-and-stock deal is likely to value online fashion retailer Myntra at more than $300 million, The deal is hugely significant, primarily because it combines two rivals into a bigger e-commerce player in India, Flipkart co-founder Sachin Bansal call that their operations will remain separate.
Myntra sells products from over 650 brands like Nike, HRX by Hrithik Roshan, Biba and Steve Madden and clocked revenue of about Rs 1,000 crore in the previous financial year. Myntra has set a goal of generating Rs.20,000 crore in gross sales by 2020, for which the site would need more than $200 million in cash, co-founder and chief executive Mukesh Bansal said.
Bansal will head the fashion business of both Myntra and Flipkart, and Myntra will operate as an independent entity and retain its website, while Flipkart will continue selling apparel on its site. Flipkart is currently India’s largest e-commerce website offering over 15 million products, with over 18 million registered users and 3.5 million daily visitors. It has raised over $540 million since it launched in 2007.
Flipkart’s valuation jumped to $2-$2.5 billion following the Myntra deal, one person with direct knowledge of the matter said.