Myntra Acquisition: Efficient price discovery?

The Indian startups are celebrating the acquisition of Myntra by flipkart, some estimates put the valuation of the deal at $370mn. Myntra, the older of the two, is in a high margin category – fashion, which is also one of the largest categories in the offline market. It has made some great moves by introducing its private label and celebrity lineups, but it is also has higher returns, resulting in high operating costs.

Did shareholders of Myntra get the maximum value from the acquisition? Most acquisitions we hear in media have competing bidders and Myntra could have looked for other buyers and not just Flipkart. As news of the deal has been around for months before the deal was finalized, both had invested/sunk time, money and reputation into the deal and were in high pressure to close the deal. Myntra could have been bought over by one of the large conglomerates that are also in offline fashion retail or international investors, these have deep pockets for investments and innovation. With competing bidders, the price discovery would have been more fair and in this case Myntra shareholders may have benefited.

myntra acquisition

Disclosure: Both Myntra and Flipkart are private companies sharing very little financial information, so these comments are based only on publicly available information.