Indian e-comm giant Flipkart proposes merger to arch rival Myntra
The idea of the merger began as Myntra was sealing a US$50M fund from a consortium of investors led by PremjiInvest, says an industry reportBy Saloni Surti 30 Jan, 2014
Just when we thought that the Indian e-commerce battle could not heat up any more, a merger proposition from Flipkart to a leading fashion and lifestyle portal has changed the perception.
According to an industry report, Flipkart.com has proposed merger to arch rival Myntra.com. The report states the idea of the merger began taking roots as Myntra was sealing a US$50 million (approx Rs 300 crore) fund-raise from a consortium of investors led by PremjiInvest.
The report further states that the decision of the impending merger is expected to be out in two weeks and will be based on the comfort of all the involved parties.
Flipkart will keep the latter as a separate unit with the current management running the business.
Flipkart and Myntra are both based in Indian IT hub Bangalore and have common investors such as Tiger Global and Accel Partners.
Tiger and Accel together own 53 per cent shares, while IDG Ventures and Kalaari have a combined stake of 28 per cent in Myntra. Mukesh Bansal owns nine per cent, leaving the rest with other co-founders and staff. In Flipkart, the two common investors (Tiger & Accel) together hold around 40 per cent shares.
If reports are to be believed, Flipkart has been looking for a new round of funding and merging with Myntra is one of the options. Flipkart, also, has been looking at acquiring several smaller apparel websites.
India’s nearly US$3.1 billion e-commerce market is small in comparison to China’s US$200 billion market for online sales, but is expected to grow by seven times to US$22 billion in five years, according to a CLSA report.
e27 has reached out to Myntra and Flipkart for comments.
While Myntra has been a leader in the fashion and apparel segment, Flipkart enjoys leadership in books and electronics. A combined entity could grow to become one of the strongest partnerships posing serious threats to industry players such as Jabong, Homeshop18, Amazon and Yebhi.
To know more about the development, keep watching this space.