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Flipkart Acquires Myntra! It’s Done

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[Post Updated: Flipkart & Myntra Officially announce the acquisition. Please see the update at end of the post.]

Finally, it has happened!

Wishes of Investors (in Flipkart & Myntra) have come true. Multiple sources and media publications are reporting that Flipkart has picked up majority stake in Myntra.

We have also sent emails to Flipkart and Myntra for confirmation, however we have not got any responses from them as yet.

Flipmynt-merger-talks

Although, it has not been officially confirmed, in all probability the deal has been struck, and it is just matter of time before both the parties officially come out with a statement. If these were just rumours, surely some form of denial would have been out by now.

Coming to the deal, different sources are claiming different numbers. The Mint report pegs the acquisition deal around $300-$330 million, while the NextBigWhat report (who broke the news) pegs it at $250-$300 million. These are tad lesser than what Myntra has been aiming for; they were looking at a valuation closer to $400 million.

From what we have heard, the deal will be cash and stock deal (stock will make up for majority of portion) with a valuation of upwards $300-$325 million.

Flipkart & Myntra Funding Till Date

Flipkart till date has raised USD 541 million in six rounds of investment, the latest round being of 160 million in October 2013. Here are details of the 6 rounds raised by Flipkart.

Round Who Funded Date Amount
First Round Accel India 2009 USD 1 Million
Second Round Tiger Global 2010 USD 10 Million
Third Round Tiger Global June 2011 USD 20 Million
Fourth Round Naspers / ICONIQ Capital August 2012 USD 150 Million
Fifth Round Naspers, Accel Partners, Tiger Global, and ICONIQ Capital July 2013 USD 200 Million
Sixth Round Dragoneer Investment Group, Morgan Stanley Investment Management, Sofina and Vulcan Capital, Tiger Global Oct 2013 USD 160 Million

Myntra on the other hand has raised USD 115 million in funding till date, the latest round being from Premji Invest, who invested USD 50 million in Feb 2014. Myntra’s valuation in last round of fund was USD 160 million.

Here is Myntra’s Funding chart till date

Round Who Funded Date Amount
First Round Accel India, NEA-IUV, IDG ventures November 2008 USD 5 Million
Second Round Tiger Global, IDG Ventures Indo-US Venture Partners March 2011 USD 14 Million
Third Round Tiger Global Feb 2012 USD 21 Million
Fourth Round Tiger Global, Accel Partners May 2013 USD 25 Million
Fifth Round Premji Invest Feb 2014 USD 50 Million

Common Investors

If you see above charts of funding, 2 investors stand out, who have lot of stake in both Flipkart and Myntra – Tiger Global and Accel Partners. Both the investors combined own 53 percent in Myntra and around 40% in Flipkart.

With that kind of equity holding, they are bound to influence and push the decisions such as these.

Flipkart & Myntra Revenues

Although both the entities are still making losses, they have been growing at fierce pace. Flipkart had announced that they hit $1 Billion GMV (gross merchandise value), one year before its target.

On the other hand, Myntra is expected to have a revenue run rate of $200 million by March 2014. To put it in perspective brick & mortar stores of Shopper’s Stop and Lifestyle have logged revenues of $500 million. Myntra is expecting to surpass them in next couple of years.

Why This Deal is Coming Through?

One word – Amazon!

I doubt if this deal would have gone through if Amazon had not made such a grand entry last year. Given their hectic growth (in terms of categories as well as sales), every major Indian e-commerce site is wary of them.

And in case of Flipkart & Myntra, investors are rather more worried than they themselves. Investors have put in large chunks of monies in both of them and they know that a combined entity would have a much better chance of fighting mighty Amazon rather than 2 separate entities.

In my view too, this is a great development. Undoubtedly, both these entities complement each other well with very little overlap. Both of them coming together will definitely bring down expenses, especially on logistics side.

Do let us know what you think about this deal!

Update: May 22nd, 5:00 pm

In a conference today, Flipkart has made the official announcement of acquiring Myntra. They have not disclosed financial details of the transaction, but here are some of the other details of the acquisition that might Interest you.

– Flipkart and Myntra will continue to work as independent entities and grow together as leaders in the Indian e-commerce industry.

-Mukesh Bansal will remain the CEO of Myntra, and will also head the fashion business for Flipkart and join the Board

Here are the statements given by both the companies:

Sachin Bansal and Binny Bansal, co-founders of Flipkart said, “We believe that the future of fashion in India is e-commerce. We have known Mukesh for a long time and are delighted to partner with him. Myntra has a strong team with excellent domain knowledge. They also have the best relationships with lifestyle brands. 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.”

Mukesh Bansal, co-founder and CEO of Myntra said, “We are excited to partner with Flipkart, the biggest e-commerce platform in India. 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,”.

  1. spoorti says

    what were the role of merchant bankers during mergers and acquisitions between flipkart and myntra?

  2. […] Flipkart To Buy Myntra, The Deal Seems To Be Finally Done! […]

  3. KarSho says

    Nice one. But im always using Ebay.

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