Mumbai, May 22: Online retailer Flipkart today acquired Myntra, marking the largest ever deal in the country’s e-commerce industry.
While details of the deal were not disclosed, it is learnt to be an all-stock transaction worth Rs 2,000 crore.
The deal will help Flipkart to strengthen its presence in online fashion retailing and also take on rivals such as Amazon and Snapdeal.
Flipkart will acquire 100 per cent of Myntra, but the latter will operate as an independent entity.
“It is a 100 per cent acquisition and going forward, we have big plans in this segment. Flipkart and Myntra are getting together to create one of the largest e-commerce stories and together we will dominate the market,” Sachin Bansal, co-founder and CEO of Flipkart, told reporters in Bangalore today after announcing the acquisition.
Founded in 2007, Flipkart is now the country’s largest e-retailer. It is strong largely in the books and the electronics segments.
The company, which may come out with an initial public offering in the next few months, believes that there is huge potential in the online fashion segment.
This segment is set to overtake electronics as the largest e-commerce category in the next few years. Myntra has partnerships with over 650 fashion and lifestyle brands in the country.
“We, at Flipkart, believe that we want to be leaders in every segment and fashion is a category of the future. This acquisition will help us become leaders in this category,” Bansal said.
The company is planning to invest $100 million (around Rs 600 crore) in the fashion business in the near-term.
Mukesh Bansal, founder of Myntra, said it was essential to keep the company a separate entity and preserve its culture. “I’m here for the long haul and we will continue to grow in the market.”
India’s e-commerce market is estimated at around $13 billion in 2013, according to a joint report by KPMG and the Internet and Mobile Association of India. The online travel segment contributed over 70 per cent to total consumer e-commerce transactions last year.
The market, which is expected to grow rapidly over the next few years, has become more competitive with companies such as Snapdeal, eBay and Jabong trying to lure domestic consumers with offers.
Last year, Amazon, the world’s largest e-retailer, entered India and has aggressively gained market share by expanding its product range and introducing the one-day delivery system.
Flipkart’s annualised sales crossed $1 billion (over Rs 6,100 crore) a year ahead of target. It is estimated to reach the billion-dollar mark in gross merchandise value by 2015.