Homegrown ecommerce major Flipkart is reportedly in talks with buy a large minority stake in online ticketing platform BookMyShow. As per a Mint report, Flipkart wants to not only invest fresh capital but also buy shares from some of BMS’ parent Bigtree Entertainment’s investors.
This move by Flipkart is being seen as its efforts to improve customer stickiness and gain a lot more out of urban India’s spending.
If the proposed deal goes through, BMS is likely to be valued at $500-700 million. Flipkart’s initial intention was reportedly to buy out BMS, however, sources told Mint that a stake sale is more likely that a complete buyout.
Founded back in 1999 by Ashish Hemrajani, Rajesh Balpande, Parikshit Dar, Mumbai-based BMS is an online ticketing company, not just for movies but also for events and sports. It is one of the very few profitable internet business in India. Mint reports that the firm posted a profit of Rs 3.1 crore on revenue of Rs 248 crore for the year ended March 2016.
It last raised Rs 550 crore in July 2016 from Stripes Group, Accel Partners, SAIF Partners and Network18 at a valuation of over Rs 3,000 crore. Accel is also an investor in Flipkart.
BookMyShow now faces competition from Paytm, which recently bought a majority stake in Insider.
At a time when Amazon is expanding beyond ecommerce through Prime, this could be Flipkart’s move to stay ahead of competition and ensure customers stay loyal to Flipkart. Mint reports that Flipkart is seeking a deal and business partnership with BookMyShow with the idea of getting a higher share of the spending by upper-middle-class and rich Indians.
And since Flipkart doesn’t have an equivalent service such as Prime, it is looking to forge partnerships with the likes of BookMyShow.
Flipkart has been on an acquisition spree over the past few years. Now plush with funds from SoftBank and Tencent holdings, Mint reports that Flipkart plans to pursue more M&A deals. Since inception in 2007, it has bought or invested in over 20 companies.
Last month, Flipkart bought F1 Info Solutions, which offers repair services for mobiles and electronics, for an undisclosed amount. Before that it bought eBay’s India operations earlier this year.
Its largest acquisition was that of online fashion retailer Myntra for more than $330 million in May 2014 and Jabong in July 2016. Earlier this year, it also tried to buy Snapdeal for nearly $1 billion in stock but the deal collapsed in August after Snapdeal decided to continue operations on its own.