Amazon thinks of aquiring Jabong

Ama­zon is in pre­lim­i­nary talks to buy Jabong, part of the US-based online retail­er’s plan to bol­ster its pres­ence sell­ing fash­ion prod­ucts, four peo­ple aware of the dis­cus­sions told ET.

Jabong is one of the fash­ion por­tals that Ama­zon is inter­est­ed in acquir­ing, and Jabong has oth­er suit­ors, the sources said, cau­tion­ing that a deal is not immi­nent. A reg­u­la­to­ry fil­ing by Rock­et Inter­net, which incu­bat­ed Jabong, put the val­ue of the fash­ion por­tal at 388 mil­lion euros, or $50 ..
A per­son with direct knowl­edge of nego­ti­a­tions said that Jabong is hold­ing out for much more — at least $700 mil­lion. Ama­zon said it does “not com­ment on any­thing we may or may not do in the future”. Jabong did not reply to emailed questions.

“After Myn­tra got acquired by Flip­kart, Jabong is the ide­al can­di­date,” said a per­son who is work­ing close­ly with Ama­zon on the nego­ti­a­tion. A big chunk of the $2 bil­lion that Ama­zon founder Jeff Bezos has promised to invest in India is meant for acqui­si­tions, this per­son said. Ama­zon is bat­tling leader Flip­kart for dom­i­nance in one of the world’s fastest-grow­ing mar­kets for online retail, expect­ed to reach Rs 50,000 crore by 2016 accord­ing to con­sul­tan­cy CrisilB­SE ‑3.26 %.

Last month, Bezos told ET that the val­ue of goods sold by Ama­zon India in a year had topped $1 bil­lion and that fash­ion was one of the “excit­ing fron­tiers” for the Seat­tle­based com­pa­ny. Jabong, which counts Ger­many’s Rock­et Inter­net and Swedish invest­ment firm Kin­nevik among its investors, is the sec­ond­largest fash­ion por­tal in India after Myn­tra, which was acquired by Flip­kart in May for an esti­mat­ed val­ue of $370 million.
Accord­ing to indus­try esti­mates, the Flip­kart-Myn­tra com­bine has a mar­ket share of over 50% in fash­ion retail and Jabong 25%. Fash­ionara and Limeroad are the oth­er sig­nif­i­cant fash­ion por­tals. ET has not been able to estab­lish if they are in talks with Ama­zon. For Ama­zon, get­ting it right in India is vital to its for­tunes, espe­cial­ly because its pres­ence in Chi­na is neg­li­gi­ble where Aliba­ba dominates.

Source: Eco­nom­ic Times