FLIPKART-OWNED MYNTRA ACQUIRES RIVAL JABONG FOR $70 MILLION

Deal cements Myntra’s position as the leader in fashion etailing

India’s largest fashion e-commerce platform Myntra on Tuesday said it had bought its largest competitor Jabong for $70 million (₹470 crore). A source in Flipkart, which owns Myntra, said it was an all-cash deal.

Emails sent to Flipkart, Myntra and Jabong remained unanswered on the details of the deal.

The deal further strengthens Myntra’s industry leading position in the $16-billion (over ₹1 lakh crore) online fashion retail business in India. Myntra was bought by Flipkart in 2014 for ₹2,000 crore.

“Fashion and lifestyle is one of the biggest drivers of e-commerce growth in India. We have always believed in the segment and Myntra’s strong performance has reinforced this faith,” said Binny Bansal, co-founder of Flipkart said in a statement.

Ananth Narayanan, CEO of Myntra said that both the companies won’t be merged immediately. “Together, though as separate companies, Flipkart, Myntra and Jabong will expand the overall online fashion market, which is still nascent in India,” he said.

Jabong, promoted by Germany’s Rocket Internet , has been seeking a buyer for over a while now. Two years ago, Amazon was rumoured to be in talks to buy Jabong, but Rocket Internet valued the company $1.2 billion, making the deal unaffordable. Even ShopClues evaluated Jabong, but it was too expensive.

In the past couple of months Snapdeal, Paytm, Future Group and Aditya Birla Group were in discussion before Myntra flipped the deal in its favour.

A Rocket Internet investor presentation pegged Jabong’s net revenue of the first quarter in 2016 at ₹240 crore, up 14% from ₹212 crore in the same period a year ago.