Flip­kart+Myn­tra to Take on Ama­zon Now

The Economic Times - - Business Of Brands - OUR BUREAU

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

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.