Bloomberg News

Flipkart to Buy Myntra to Widen Lead Over Amazon in India (1)

May 22, 2014

Flipkart, India’s largest multibrand online retailer, agreed to buy competitor Myntra.com as it seeks to widen its lead over Amazon.com Inc. (AMZN:US) in the country.

Flipkart will buy 100 percent of Myntra, Chief Executive Officer Sachin Bansal said at a press conference in Bengaluru today. The deal values Myntra at about $330 million and its shareholders will get a combination of cash payouts and stakes in Flipkart, a person with knowledge of the talks, said this week. Bansal today declined to comment on details of the deal.

The purchase gives seven-year-old Flipkart access to Myntra’s customers and suppliers strengthening its position as the retailer fends off competition from EBay Inc. (EBAY:US) and Amazon. India’s Internet retail market is estimated to expand sevenfold to $22 billion by 2018, according to CLSA Asia-Pacific Markets.

“What it does for Flipkart is that it kind of breaks into a segment which is not a historic stronghold,” Niren Shah, managing director at Norwest Venture Partners’ Indian unit, said before today’s announcement. “And this by the way is a very critical segment, because it has huge margins.”

Flipkart had a 4.9 percent share of the 170 billion rupees ($2.9 billion) worth of Internet retailing transactions in 2013 according to Euromonitor International estimates in a March report. Myntra controlled a 4.1 percent share, while Amazon and EBay had 1.6 percent and 1.2 percent respectively.

Flipkart will invest $100 million in the fashion business in the “near future,” said Bansal.

“There are multiple ways of building a fashion business,” said Binny Bansal, co-founder and chief operating officer of Flipkart. “It became very clear to us that it will be very valuable for Flipkart shareholders and Flipkart as a company to own multiple assets from a fashion point of view.”

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net Subramaniam Sharma, Suresh Seshadri


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