Flipkart acquires Myntra to create India's largest e-commerce platform

It’s official: Flipkart has fully acquired online fashion retailer Myntra to create the largest e-commerce online platform in India.

The size of the deal was not mentioned, although officials said the merger was “a 100 percent acquisition”.

Myntra’s Mukesh Bansal declined to comment on the valuation of the merger, saying that details could not be provided because of a confidentiality agreement with investors.

However, a source in the company said the transaction was valued at close to $300 million, according to a Reuters report.

Both companies are expected to remain distinct entities and execute their own business strategies. For the combined entity, the overall employee (full-time) strength is expected to go up to 4,000. Flipkart has around 3,000 employees, while Myntra has around 750.

The deal gives Flipkart a stronger hold in the fast-growing online fashion business in India. At a press conference to announce the deal, officials from both companies said they expected the fashion business is expected to become the biggest product category for Flipkart in the next few years.

Myntra’s founder, Mukesh Bansal, will join Flipkart’s board and head the fashion e-commerce business.

“We are very excited about merger with Flipkart. Thismerger will be a game changer in e-commerce,” Mukesh said at the press conference.

Flikpart’s Binny Bansal said that the acquisition was primarily for scaling up the e-tailer’s operations. He also said thatMyntra will be kept as a separate entity.

A Flipkart-Myntra merger will result in a far more bulked up rival against the likes of eBay and Amazon, and could also blow domestic rivals like Snapdeal out of the water.

Myntra claims to be the biggest fashion portal in India’s e-commerce industry.The fashion e-retail industry is reportedly estimated to be worth approximately $20 billion.

With the acquisition, Flipkart and Myntra hope to command a 50 percent share of the online fashion retail market in the next few years. Currently, Myntra holds about 30 percent of the fashion e-retail market.

Arvind Singhal, chairman, Technopak Advisors, Firstbiz,“Both companies here will synergise at various areas like technology platforms, online customer database and logistical strengths to take advantage of the merger and expand.”

Fashion-centric Myntra operates in a sector with high margins, while Flipkart works with low margins but high volumes.

Flipkart has been undertaking a slew of steps to take on Amazon, that offers almost the same number of products. New services the company is offering include virtual branded stores, a customer loyalty programme called Flipkart First and same day delivery of products.

Amazon has been pushing for regulatory approval for FDI in e-commerce instead of the present marketplace model where third party sellers sell directly to shoppers through online platforms.

With inputs from Shonali Advani