The widely-anticipated acquisition of Bangalore-based online fashion store Myntra by its cross-town peer Flipkart is likely to close by end of May, sources aware of the development told FE. The deal, which was expected to materialise in April, was delayed as stakeholders had to go back to the drawing board several times to reach a consensus on Myntra’s autonomy. Flipkart is likely to go for an IPO in Singapore after the acquisition, the sources said.
Over the next two weeks, stakeholders will look to iron out differences over the autonomy issue as well as discuss ways to channel more funds into Myntra as CEO Mukesh Bansal has been insisting on an infusion of $100-150 million to continue with his expansion plans for the portal. According to sources that FE spoke to, some early stage investors may exit Myntra in the subsequent weeks. Bansal is keen on retaining his 9% share in the company.
“We are exploring a strategic tie-up and evaluating it from all angles with the intent of ensuring that our Myntra brand agenda is accelerated. We are in talks with both strategic and financial investors and have not finalised anything yet,” Myntra’s Bansal said.
The issue of autonomy could come in the way of the deal, something that is nagging both the firms. “There were a number of issues to be settled which took time. The stakeholders mainly had differences over Myntra’s autonomy. This has been a bone of contention for some time now. Future funding was also discussed at length,” a source said.
The source also added that Myntra has been valued at $330 million, much lower than its $400-million pitch. Flipkart has been valued at $2.5 billion. It is, however, not yet clear whether Myntra will cease to be an independent entity after the acquisition.
The big-ticket acquisition is being viewed as a watershed moment for the $13-billion Indian e-commerce industry, especially in the wake of global e-commerce giant Amazon setting foot in India last June.
According to experts, increasing presence of global e-commerce players in India might prompt the home-grown companies to go the mergers and acquisitions way to contain the global players. Ever since its India launch, Amazon has expanded its offerings to 15 million products across 20 categories. Another global player, eBay, has led two rounds of funding in online marketplace Snapdeal, once in April 2013 and again in February 2014.
Flipkart’s acquisition of Myntra is