Flipkart-owned Myntra beats Snapdeal, Future Group to acquire rival Jabong
Flipkart-owned fashion e-tailer Myntra, on Tuesday, announced the acquisition of Jabong from Global Fashion Group for an undisclosed amount, in a bid to further strengthen its portfolio in the lucrative online fashion retail space.
Myntra, which was acquired by Flipkart in 2014 in an estimated Rs 2,000 crore deal, will have access to a combined base of 15 million monthly active users.
“The acquisition of Jabong further strengthens Flipkart Group’s position as the undisputed leader in Fashion and Lifestyle segment in India. Jabong is among India’s major fashion multi-brand e-store with more than 1,500 on-trend international high-street brands, sports labels, Indian ethnic and designer labels and over 1,50,000 styles from over a thousand sellers,” Myntra said in a statement.
Some of global brands that will be exclusive to both the platforms include Dorothy Perkins, Topshop, Tom Tailor, G Raw Star, Bugatti Shoes, The North Face, Forever 21, Swarovski, Timberland and Lacoste.
“Fashion and lifestyle is one of the biggest drivers of ecommerce growth in India. We have always believed in fashion and lifestyle segment and Myntra’s strong performance has reinforced this faith,” Flipkart CEO and co-founder Binny Bansal said.
This acquisition is a continuation of the group’s journey to transform commerce in India, he added.
“The acquisition of Jabong is a natural step in our journey to be India’s largest fashion platform. We see significant synergies between the two companies especially on brand relationships and consumer experience. We look forward to working with the talented Jabong team to shape the future of fashion and lifestyle ecommerce in India,” Myntra CEO Ananth Narayanan said.
Jabong has been in the market for a sell-off and was in discussion with companies including Future Group, Snapdeal and Aditya Birla-owned Abof among others.
Jabong was founded in 2012. In September 2014, its investor, Rocket Internet merged Jabong with four other online fashion retailers in Latin America, Russia, the Middle East, South-east Asia and Australia to create Global Fashion Group (GFG). Swedish investment firm Kinnevik also owns a large stake in Jabong’s parent Global Fashion Group.
While no financials about the Jabong sale were disclosed, a press release on the website of Global Fashion Group pegged the sale at $70 million.
“Global Fashion Group (GFG) has entered into a definitive agreement to sell Jabong, its Indian business, to Flipkart Group for US$70 million in cash. The transaction is a decisive step in GFG’s strategy to refocus its business on core markets and further accelerate its path to profitability,” the press release said.
While Jabong has managed to reduce losses by curtailing discounts, both Kinnevik and Rocket Internet seemed unwilling to infuse fresh capital, seeking a possible exit.
In April this year, GFG raised fresh funding from existing investors at a significantly lower valuation, raising 300 million euros from Rocket Internet and Kinnevik. Post the last round, GFG was valued at 1 billion euros, a drastic fall from earlier valuation of 3.1 billion euros.
According to a PTI report, e-tailing has grown at 57 per cent year-on-year, moving from Rs 24,046 crore to Rs 37,689 crore between the December 2014 and December 2015. It is further estimated to touch Rs 72,639 crore by end of 2016.
As per a Rocket Internet investor presentation, Jabong had a net revenue of 32.6 million euros in Q1 2016, up 14 per cent from 28.6 million euros in the year-ago period. For FY2015, its revenues were at 122.1 million euros.