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Jabong reportedly in acquisition talks with Aditya Birla Group, Snapdeal, and Flipkart

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Just when you began to think that it might still make a comeback, online fashion retailer Jabong is once again looking for potential buyers. According to a report in Livemint, Jabong is in initial talks with Aditya Birla Group, Snapdeal, and Flipkart among others for a possible acquisition.

The report cited people familiar with the development who said that CEO of Swedish investment firm Kinnevik, Lorenzo Grabau was in India last week to talk with the executives of said companies.

Kinnevik is the largest shareholder in Global Fashion Group of Rocket Internet. Rocket Internet had included Jabong in its Global Fashion Group in 2014.  GFG comprises of fashion businesses of Rocket Internet from Latin America, Russia, the Middle East, South-east Asia and Australia.

A couple of months back, we reported that in order to attract buyers, Jabong had dropped its valuation to just $100 Mn from the $1Bn it had claimed in 2014. But apparently, investors were still not interested.

This time also, Kinnevik is aiming for a valuation of $100-150 million in a cash and stock deal. However, Jabong might not get the deal at this valuation. The people mentioned above suggested that the deal could close at a much lower valuation of $50-75 million.

Ups and Downs at Jabong

Rocket Internet has been looking to exit Jabong for quite some time now but has not got any buyers. Meanwhile, it has kept Jabong on ventilator of sorts by pumping money and allowing time to get back on track.

And it seemed like Jabong was indeed coming on track when in January this year, the firm claimed achieving the highest MOM profits. Recently, it claimed an increase of 14% in quarterly revenues. It also managed to reduce its losses from 16.3 million euros to 11.9 million euros.

But at the same time, it has also been struggling with other issues- a major fire, exit of employees, and of course, lack of funds. And now, investors are looking to permanently exit from the firm.

“Rocket Internet is keen to exit Jabong, while Kinnevik wanted to stay on and find a strategic investor. However, due to a financial crunch, a complete sell-out is more probable now,”

said people familiar with the development.

Aditya Birla group which now has its own online fashion store abof.com along with Snapdeal are the top suitors at present.

On the other hand, Flipkart has also shown an interest in the deal because of its own fashion portal Myntra. Jabong apparently approached Alibaba and Amazon as well for the deal but the talks did not go further than the early stage.

Reportedly, Future Group of Kishore Biyani is also interested in buying Jabong. Interestingly, Rocket Internet recently sold online furniture retailer FabFurnish to Future Group only for about 6 crores .

There has not been any official confirmation about these deals. But the people cited in the above reports suggest that the deal could close within the next 6 months.

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