Jabong has been acquired by Flipkart owned Myntra at a $ 70 million valuation. Flipkart outbid other suitors like Snapdeal and Future Group who were offering 50 million and 35 million respectively. This transaction strengthened the Bengaluru based company’s position at a time when it faces good competition from Amazon.
“The sale process was competitive with multiple parties participating until the end, and Flipkart was the chosen suitor as its proposal delivered best value for all stakeholders,” a Jabong spokesperson said. The transaction caps months of seesawing talks between Global Fashion Group and Kinnevik, the owners of Jabong, and multiple Indian suitors.
Myntra Chief Executive Officer Ananth Narayanan said the largest consolidation in India’s fashion ecommerce space will create an “800-pound gorilla” of fashion and lifestyle. “I don’t think this is consolidation in the traditional sense. I intend to run Myntra and Jabong as separate entities,” Narayanan said in a telephonic interview with ET. He also assumes charges as CEO of Jabong.
The sale marks one of the most dramatic declines in India’s online retail business. At the end of 2013, Jabong was worth as much as €388 million (about $508 million). Even though its sales increased to Rs 869 crore in the last financial year, Jabong’s value collapsed because of a combination of leadership issues, market share losses and a funding crunch.
In a statement issued, Flipkart co-owner Binny Bansal said: “Fashion and lifestyle is one of the biggest drivers of e-commerce growth in India. We have always believed in the fashion and lifestyle segment and Myntra’s strong performance has reinforced this faith. This acquisition is a continuation of the group’s journey to transform commerce in India. I am happy that we will now be able to offer to millions of customers a wide variety of styles, products and a broad assortment of global as well as Indian brands.”
This transaction will definitely help Flipkart keep its rivals like Amazon, Rakuten and Alibaba at bay.