Alibaba, Future Group, Myntra in race to buy Jabong, deal size expected to be $250 million

Negotiations to acquire Jabong are underway and Alibaba, Future Group, Myntra and Aditya Birla's ecommerce venture Abof are among the top contenders to seal the deal, which is expected to be at $250-$300 million.

Snapdeal, reportedly, is also said to be in the race but won’t bid that aggressively. Even though Jabong has asked for $250-300 million, the deal size could be lower.

German incubator Rocket Internet, who founded Jabong in 2012, and Swedish investment firm Kinnevik, which owns a large stake in Jabong's parent Global Fashion Group, are keen to exit.

"Jabong has held talks with these four companies over the past few weeks. While none of the negotiations has reached an advanced stage, the deal size could be around two times its annual sales and is expected to close within the next six months," a executive told ET.

Executives from Rocket Internet and Kinnevik are currently camping in India to oversee a sale, ET quoted sources as saying.

ET reported that Jabong's revenues dropped 7% to Rs 869.1 crore in 2015 from the year earlier but it trimmed losses to Rs 46.7 crore from Rs 159.5 crore after a clampdown on discounts, much as other ecommerce companies have done.

The Gross Merchandise Value (GMV) rose 14% to Rs 1,503 crore from almost 5.4 million orders.

Jabong's net sales grew 14% to 32.6 million in the March quarter with a gross profit of 0.2 million as it derisked business by moving more toward the consignment and marketplace model and away from discounting.

Apart from this, another attractive deal with Jabong could be its top management. Jabong hired former Benetton India managing director Sanjeev Mohanty as chief executive in 2015 and former eBay executive Muralikrishnan B as chief operating officer in February.

Harminder Sahni, founder of retail consultancy Wazir Advisors, told ET, “I see merit in somebody acquiring and rebuilding brand because it is not easy to build brand awareness of that level in today's time as nobody is going to fund that kind of money in brand building anymore.”

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