India-based e-commerce company Flipkart is set to close a merger with Myntra, an India-based fashion and lifestyle online retailer, in a deal that values Myntra at about $330m and Flipkart at about $2.5bn, according to TechCrunch.
The deal is being pursued so that the two can head off the imminent expansion into the booming Indian e-commerce market by US-based online retailer Amazon and big box specialist Wal-Mart. Venture capital firm Accel Partners and investment firm Tiger Global Management are shareholders in both businesses and are reportedly the main drivers behind the merger.
Myntra, formed in 2007, has raised a reported $125m from backers including the Indian subsidiary of corporate venturing unit IDG Ventures, Kalaari Capital, NEA-IndoUS Ventures and Mumbai Angels. In January this year it raised $50m from Accel, which has been an investor since Myntra’s seed round, Tiger Global, and investment firms Sofina and PremjiInvest, reportedly at a value of $200m.
Also founded in 2007, Flipkart has followed a growth progression similar to Amazon in that it initially focused on books before diversifying into a wide range of other consumer products. It secured $360m in a two-stage series E round in 2013 from internet company Naspers, Accel, Tiger Global and Sofina, as well as Morgan Stanley, Dragoneer, Vulcan Capital and Iconiq Capital, and has so far raised more than $540m in total.
A source told TechCrunch that it could take another month before the deal is completed, as there are jurisdictional issues, but stated: “Unless the process runs into a rough weather because of some regulatory, legal bottlenecks, it’s a done deal.”