Bangalore, May 22: India’s largest online retailer Flipkart today acquired online clothing seller Myntra Designs for an estimated Rs 2,000 crore, in a deal that would give Flipkart control of roughly half of nation’s e-commerce market by sales.
Flipkart said Myntra’s chief executive Mukesh Bansal will head the combined company’s fashion division and have a seat on the company’s board.
While the two companies did not disclose the financial terms, the deal is believed to have valued Myntra at about USD 330 million and its shareholders will get a combination of cash payouts and stakes in Flipkart.
The acquisition gives seven-year-old Flipkart, set up by two ex-Amazon employees in 2007, access to Myntra’s customers and suppliers for a stronger foothold in the fast-growing online fashion market that has giants like EBay and Amazon sprawling.
India’s internet retail market is estimated to expand sevenfold to USD 22 billion by 2018 from current USD 3 billion. Flipkart had a 4.9 per cent share in 2013 while Myntra controlled a 4.1 per cent share. Amazon and EBay had 1.6 per cent and 1.2 per cent market share respectively.
“This acquisition helps us grab a bigger market share and compete better,” Flipkart co-founder Binny Bansal said adding the company will invest USD 100 million in the fashion business in the “near future.”
Bangalore-based Flipkart, which is popular for selling books and electronics online, hit the USD 1 billion gross merchandise value (GMV) mark in March this year, a year earlier than the company expected.
Myntra, which sells products from over 650 brands like Adidas, Calvin Klein and Levis, has a GMV of about USD 204 million.
Both companies will be run independently.