Flipkart, Myntra deal in final stages

As speculated in the media earlier, Flipkart and Myntra deal is said to have reached its final stages of negotiation.

The formal announcement is expected in the next few weeks. Sources claim that leading fashion e-tailer Myntra is aiming for a valuation of 400 million dollars (around Rs 2,400 crores).

Industry sources say that the deal may conclude at 370 million dollars (over Rs 2,200 crores) valuation, however it is unlikely to reach the figure at 400 million dollars. It may be recalled that Flipkart had made a merger offer to its rival Myntra, which was rejected by the latter in favour of a fund raising deal by PremjiInvest. Led by Wipro boss Azim Premji, PremjiInvest pumped in about 50 million dollars (over Rs 3,000 crores) in the leading Bangalore-based lifestyle and fashion e-tailer. Now both are said to be in talks to initiate a commercial partnership.

The merger deal comes around a time when global player Amazon is all set to start its online India operations in the next few weeks amid tough competition from existing e-com players and when Flipkart is considering an initial public offering of it's shares next year, on the Nasdaq stock exchange. Flipkart, had raised 360 million dollars (over Rs 2,100 crores) in two rounds in 2013, and was valued at around 1.6 billion dollars (over Rs 9,600 crores) in July last year.

Sources also claim that Myntra owner Mukesh Bansal will get independent responsibility for all fashion retail business involving both Myntra as well as Flipkart's fashion unit. A holding company will own shares in Flipkart and Myntra.

Myntra's Mukesh Bansal had said Myntra needed about 100-150 million dollars (Rs 600 crores to Rs 900 crores) in the next three years to reach its goal of becoming a Rs 20,000 crores fashion company by 2020 and Flipkart has agreed to invest over 100 million dollars (Rs 600 crores) into the company. The common factor between Flipkart and Myntra is US hedge fund Tiger Global and venture capital firm Accel Partners holding significant shares in both the companies. Tiger and Accel together own 53 percent shares, while IDG Ventures and Kalaari have a combined stake of 28 percent in Myntra. In Flipkart, the two common investors (Tiger & Accel) together hold around 40 percent stake.