A New Establishment
The winner of the Red Herring Global 100 award, e-tailor myntra.com, will now on function under the Flipkart label. The largest e-commerce firm, Flipkart has taken over its Indian rival for an estimated deal of 300 million dollars. It is considerably the biggest acquisition in the e-commerce field, which now makes Flipkart lock horns only with International giant Amazon.
The Bangalore based firms’ founders, Flipkart’s Sachin Bansal and Binny Bansal and Myntra’s Mukesh Bansal are noted Indian online shopping retailers. While Myntra deals only in fashion and lifestyle products, Flipkart deals in all categories from clothes and accessories to books and electronic appliances & goods.
Flipkart went ahead with the deal aiming to top the online market of the fashion industry. It is stated that Bansal, who has settled for a stake in Flipkart, will also undertake the leadership role in the fashion department of both the firms. In addition to that, Myntra employees will also receive stock options in Flipkart. However, Myntra will operate as an independent entity and will retain its own website. No investment banker or advisor was involved in the deal.
Even after a grand deal of somewhere around 1800 crore, both the companies have negotiated to remain separate entities, quite possibly to not eat up each others’ market and customers.
Flipkart has approximately raised $540 million whereas; myntra.com has managed $75 million, ever since its launch. Based on this, certain analysts are of the opinion that the merger is sure to bring in more value to the investors. Tiger Global Management, Accel Partners, and Sofina Capital are among the few common investors who will be getting more shares after the final documents are filed. The collective business of amazon.com is expected to capture a large share of India’s $3.1 billion e-commerce market, excluding travel. The accession is certainly going to bring in changes to that figure.
In the backdrop, the analysts are enthusiastic about the deal, as it has come just days after the formation of a new government at the centre.
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