Harish Bahl, founder & CEO of Smile Group and currently the chairman of Fashionandyou.com, said, "This acquisition is a strategic move and UrbanTouch.com will help us expand our product offerings in personal and beauty care segment."
As part of the deal, UrbanTouch founder and CEO Abhishek Goyal will be the new CEO of Fashionandyou.
According to an Economic Times report, it has been a cash-and-stock deal of $30 million (Rs 167.3 crore). But one source told Techcircle, the deal value is lower than the quoted mark but it is more than $10 million level. Bahl did not comment on the rumoured valuation.
Fashionandyou operates as a flash sales site while Urban Touch is a fashion and beauty e-tailor, offering over 300 brands across categories such as apparel, beauty and accessories. Post-acquisition, Fashion And You will continue to operate Urban Touch as a separate site. UrbanTouch's team of 200-plus will also join the Fashionandyou team of 750 employees and its leadership team will hold stock in the combined entity.
"We will spend on marketing for only brand as of now, but we are also planning a number of initiatives that will enable the customers of one brand to experience the other, in turn building both the brands," said Bahl.
The acquisition will also mark the exit of UrbanTouch investors Tiger Global and Accel Partners, who had invested more than Rs 20 crore in the company.
"While we have made a complete cash buy-out of the investors of Urban Touch, the leadership team has chosen to hold stock in the merged entity, hence making it a cash and stock deal," Bahl told Techcircle.
Fashionandyou was co-founded by Harish Bahl and former Yahoo India sales director Pearl Uppal in early 2010. In December 2010, the company raised $8 million from Sequoia Capital India and in November 2011, raised another $40 million in a second-round funding, led by Norwest Venture Partners and Intel Capital. Sequoia Capital India and Nokia Growth also took part in that funding round.
The company rebranded itself soon after the announcement of Uppal quitting the group. While Goyal will take over the board seat earlier held by Uppal, she will continue to remain a shareholder in the company.
As to why did it choose to acquire Urban Touch instead of building its own categories, Bahl had this to say, "There are a couple of reasons for that. First of all, although we are servicing men, women and kids alike, we hold the market leader position when it comes to lifestyle retail for women. And the only other e-commerce company that is focused on women in India is Urban Touch, so what the deal has done is to strengthen our leadership position in this market segment."
"Secondly, we were also in the hunt to find an entrepreneur who could get into Pearl's shoes, and for the same, we met more than 50 people. But it was Abhishek who we felt was perfect for that role," he added.
Other key acquisitions in e-com space
In 2012, the Indian e-commerce space has been buzzing with a number of acquisitions. Earlier this year, Flipkart.com, the largest online retailer in India, acquired Letsbuy.com, but later pulled the plug on Letsbuy. In April, Snapdeal acquired eSportsBuy.com, an online retailer focusing on sports and fitness equipment and accessories, but shut it down after two months (post-acquisition, Snapdeal has introduced a sports section on its portal). This was followed by fashion e-retailer Yebhi acquiring Stylishyou, a fashion jewellery portal, and baby products e-tailer Hushbabies acquiring MangoStreet, an online shop offering kids' products.
(Edited by Sanghamitra Mandal)