Flipkart looks at Myntra wardrobe to upgrade fashion

Flipkart, the country's largest online retailer, is close to clinching a deal for the acquisition of Myntra.com , the biggest online fashion apparel store, according to reliable sources.

The deal values Myntra at around $ 330 million and the company's shareholders will get a combination of cash and shares in Flipkart as part of the transaction, sources said.

The formal announcement of the deal is likely to come within this week.

Flipkart, founded in 2007 by former Amazon employees Sachin Bansal and Binny Bansal, is been in talks for acquiring Myntra as part of its strategy to expand its share in the fast growing online retail market.

The combined entity will give the two domestic companies the requisite muscle to stave off competition from US giant Amazon.

An estimate by CLSA Asia- Pacific Markets projects the Indian online market to jump more than sevenfold to $ 22 billion by 2018.

Flipkart said in a statement that it does not comment on "market speculation." The two companies have been very tight- lipped on the merger talks. The two companies are reported to be in direct talks with each other without involving any investment banker, sources said.

In 2012, Flipkart had acquired letsbuy.com, a portal selling electronic products.

Flipkart started business as an online books and music CDs stores and since diversified into products including smartphones, cameras sports goods.

Apparel and footwear are now its fastest- growing areas, according to the online retailer.

Sachin Bansal, chief executive of Flipkart, had earlier said the company would look at acquisitions whenever an opportunity comes.

Mukesh Bansal of Myntra, without mentioning Flipkart, has also stated earlier that the company was open to a strategic partnership if it helps boost the fashion business.

Mukesh Bansal is eyeing an annual revenue of Rs 20,000 crore by 2020, up from Rs 1,200 crore now. He claims Myntra is already half the size of the largest offline fashion store, Shoppers Stop.

The deal is being watched closely because of the competition it will trigger in the e- commerce segment. Snapdeal and Amazon also compete for upper middle- class consumers in this segment.

The government does not allow foreign direct investment in e-commerce. Amazon and eBay Inc operate online platforms, allowing local traders to sell their products to consumers.

Courtesy: Mail Today