Flipkart+Myntra to Take on Amazon Now
Flipkart has bought fashion portal Myntra in a deal estimated to be worth $370 million (about .` 2,000 crore) as it squares off against Amazon for dominance of India’s fastgrowing online retail market. At a press meet at Myntra’s headquarters in Bangalore, the company’s co-founder and CEO Mukesh Bansal announced the deal by introducing his two ‘colleagues’— Flipkart’s founders Sachin Bansal and Binny Bansal. The Bansals are not related to each other. The trio, who finalised the deal in Singapore last week, declined to reveal financial details, the share-swap ratio or the specifics of how the companies have been structured. Sachin Bansal, CEO Flipkart, said that Myntra is now 100% part of Flipkart but the companies will operate independently. “Flipkart and Myntra are getting together to create one of the largest ecommerce stories in the country,” said Sachin Bansal. “Myntra is the leader in fashion today and we would love to work with and learn from Mukesh and Myntra.” As ET reported in April, Mukesh Bansal, who has joined the Flipkart board, will now handle fashion for both the combined business. He will report to Sachin Bansal. Flipkart has also made a commitment to invest over $100 million in the fashion business in the next 12-18 months. “We will look to leverage Flipkart’s technology, supply chain, traffic, and customer database. However, we want Myntra’s brand, culture and team to be independent in the long term,” said Mukesh Bansal. A holding company has been formed in which the founders of the two companies and their investors will hold stakes, according to multiple people who have direct knowledge of the deal. The employees who have stock options will also get a stake in the holding company. Myntra’s policy of universal employee stock options will continue. All Myntra employees will now have a stake in the combined company and Mukesh Bansal said “employees will now get a significant upside.” Myntra employees have also got a bonus worth a month’s salary, said an employee of the company. Flipkart does not have a universal ESOP policy and stock options are provided based on designation and to top performers. The two companies have three common investors — investment firm Tiger Global, earlystage investor Accel Partners and Belgian family office Sofina. Flipkart's other investors are Naspers, Dragoneer, Morgan Stanley and Vulcan Capital. Myntra's investors also include Premji Invest, Kalaari Capital and IDG Ventures India. The companies declined to disclose if any investors are exiting. The acquisition is taking place in the backdrop of Amazon’s aggressive growth in India. Amazon , which completes one year of India operations next month, has expanded to over 22 product categories Experts see the deal as an attempt to counter Amazon, which posted sales of nearly $75 billion last year.
THREE BANSALS IN A CART: (Left to right) Binny Bansal of Flipkart, Mukesh Bansal of Myntra and Sachin Bansal of Flipkart in Bangalore on Thursday.— N Narasimha Murthy