We have been hearing murmurs of a Flipkart-Myntra merger since January. Now, news has it that Flipkart has bought a major stake in Myntra in a cash and stock deal that could value the company between $300-330 million (Rs 1,800-2,000 crore).
Last month, a report had hinted that the FlipkartÂ board had started taking investor approval and the deal would value Myntra at $330 million, while Flipkart has a valuation of $2.5 billion.Â The two companies are believed to have been in talks to merge their businesses in the light of Amazonâ€™s expansion of its marketplace services in the country. Moreover, thereâ€™s pressure on existing players as Walmartâ€™s entry into the Indian e-commerce market is imminent. Then thereâ€™s eBay, which is backing Snapdeal and its own marketplace in India.
While reports circulating the web claim both the companies are expected to continue functioning independently after the dea, Â itÂ isn’t Â yet clearÂ if Flipkart will be taking over the operations of Myntra or just the brand name.
A Flipkart-Myntra merger will result in a far more Â bulked up rival Â against the likes of eBay and Amazon, and could also blow domestic rivals like Snapdeal out of the water.
While both the companies have refused comment on the deal, a spokesperson for Myntra was quoted asÂ tellingÂ MintÂ that the company would hold a press conference on Thursday where it would “announce an important strategic developmentâ€ť.
While Flipkart is perhaps the closest competitor to Amazon in India, its acquisition of Myntra is expected to play a major role in it gaining market share in the online fashion retail sector. Myntra claims to be the biggest fashion portal in India’s e-commerce industry.
The fashion e-retail industry is reportedly estimated to be worth approximately $20 billion.
Flipkart has been undertaking a slew of steps to take on Amazon, that offers almost the same number of products. New services the company is offering include virtual branded stores, a customer loyalty programme called Flipkart First and same day delivery of products.
Amazon has been pushing for regulatory approval for FDI in e-commerce instead of the present marketplace model where third party sellers sell directly to shoppers through online platforms.
First appeared on Firstbiz.