After making news for months regarding its sell off, Jabong finally has found a ideal soulmate. After snapping Myntra two years back to strengthen its fashion category, Flipkart today announced that it has further boosted it by acquiring Jabong.
Jabong was also in talks with companies like Future Group, Snapdeal, Aditya Birla – owned Abof for a possible acquisition. But Flipkart finally managed to be the frontrunner for closing this deal.
Announcement was made by Sachin Bansal on Twitter.
Welcome @JabongIndia to the @Flipkart family. We’ll create history together.
— Sachin Bansal (@_sachinbansal) July 26, 2016
Today, @Myntra got bigger! Delighted to welcome @JabongIndia to the @Flipkart group!
— binnybansal (@binnybansal) July 26, 2016
Rocket Internet backed Jabong was founded in 2012. In September 2014, Jabong was merged with four of its fashion brands to form one single business. The combined entity will have valuation of$3.5 Bn. Dafiti (Latin America), Jabong (India), Lamoda (Russia and CIS),Namshi (Middle East) and Zalora (Southeast Asia and Australia), to be known as GFG i.e. Global Fashion Group.
In March this year, Global Fashion Group (GFG) had infused additional $20 Mn into Jabong, to keep it afloat for one more year, while carrying out negotiations for sale with other parties.
Besides, Swedish investment firm Kinnevik also owns a large stake in Global Fashion Group that owns Jabong. Kinnevik was negotiating with buyers on behalf of Rocket Internet, which owns more than 21% of GFG for Jabong and was seeking a valuation of $100-150 Mn in cash and stock. However, the deal was expected to close at a much lower valuation of $50-60 Mn. The financial terms of the deal are undisclosed for now.
In September 2015, Jabong’s CEO and co-founder, Arun Chandra Mohan had stepped down from his position. This took the toll to Jabong’s five founders who either left or were replaced in a management churn. Right after the exit the talks to sell Jabong to Paytm fell apart in September 2015. In October-December 2015, Jabong’s gross merchandise value (GMV) dropped by one-fifth to INR 377.3 Cr (approx $57 Mn).
Earlier there were also reports that Jabong is shifting to a marketplace model from an inventory-based model amid a long-drawn sale process.
Update 1: 1:30 PM
The deal is worth $70 Mn and is cash only.
Story is developing.
