After acquiring BabyOye last year, Mahindra & Mahindra has now agreed to sell it to FirstCry for Rs. 362.1 crore ($54 million) in a cash and stock deal. Along with the acquisition, the company has also raised $34 million in a latest funding round.
The acquisition is said to help the company to significantly expand its offline presence as well as strengthen its position as a leader in the babycare segment. In a filing to the Bombay Stock Exchange, Mahindra and Mahindra Ltd said the deal will comprise an equity component worth Rs. 354.6 crore and Rs. 7.5 crore in cash. The BSE filing statement read:
A business transfer agreement has been executed by and between Mahindra Retail Pvt Ltd (MRPL), a subsidiary of the company, Brainbees Solutions (FirstCry) and founder of FirstCry to transfer the franchise division of MRPL (BabyOye) as a going concern on a slump sale basis to FirstCry.
The company has said that the merged entity will conduct its business under the brand name FirstCry.Com – A FirstCry Mahindra Venture. It will have a parent base of over 4 million, a footprint of over 300 stores spread across 125 cities. This includes 120 stores under the BabyOye brand, operated by Mahindra Group.
As of the funding round, the company has raised around $34 million from the Mahindra Group, PE fund Adveq, and Kris Gopalakrishnan. Existing investors IDG Ventures India, New Enterprise Associates, SAIF Partners, Temasek Holdings, Valiant Capital Partners and Vertex Ventures have also participated in the latest round.
Anand Mahindra, chairman and managing director of the Mahindra Group, said in a statement,
I believe that the future belongs to click and brick businesses, and that consolidation is the way to thrive and establish industry leadership. I am optimistic that this consolidation of the strengths that both groups bring to the partnership will result in a winning proposition. We are hugely excited by the possibilities.
FirstCry was founded by Supam Maheshwari in 2010. It follows an omni-channel strategy and operates about 180 brick and mortar stores. The baby-care and maternity products seller also owns a private label children’s apparel brand called BabyHug.
It also owns a logistics business, which competes with third-party logistics companies such as Delhivery and Ecom Express among others. It launched logistics business in 2012 and spun it off into a separate entity called Busybees Logistics Solutions in September 2015. It had raised Rs.85 crore separately for the logistics business in February 2016 from existing investors.
In a statement, Supam Maheshwari, founder of FirstCry, said,
We are delighted to partner with a prestigious business house like Mahindra, both as a retail brand and as an investor. FirstCry.com has been at the heart of organising the huge baby and kids market in India. FirstCry.com will help scale up the reach of this service and experience faster. Our partnership with the Mahindra Group will bring in synergies that will help us scale and achieve our profitability goal much faster. Together, we will continue to scout for more opportunities for inorganic growth.