Myntra, which is owned by parent company Flipkart has bought Jabong in all cash deal worth $70 million. Pictured: An employee works inside the office of Myntra in Bengaluru, India, May 6, 2015.Reuters

Jabong, a fashion and lifestyle e-commerce portal, has been acquired by its rival company Myntra. The value of the deal is pegged at $70 million and Flipkart (parent company of Myntra) has agreed to settle the amount in cash.

With this acquisition, Flipkart's position in the fashion and lifestyle segment will be strengthened and the deal would reportedly give Myntra access to 15 million active users.

"The acquisition of Jabong further strengthens Flipkart Group's position as the undisputed leader in fashion and lifestyle segment in India. Jabong is among India's major fashion multi-brand e-store with more than 1,500 on-trend international high-street brands, sports labels, Indian ethnic and designer labels and over 1,50,000 styles from over a thousand sellers," Myntra said about the acquisition.

Binny Bansal, co-founder of Flipkart, told the Mint that fashion and lifestyle is one of the biggest drivers of e-commerce growth in India. He also said that Myntra's strong performance has restored the faith of Flipkart.

"This acquisition is a continuation of the group's journey to transform commerce in India. I am happy that we will now be able to offer to millions of customers a wide variety of styles, products and a broad assortment of global as well as Indian brands," Bansal said. 

Gurgaon-based Jabong, which is owned by Global Fashion Group (GFG), initially held discussions with Amazon, but the talks reportedly fell through in the initial stages.

Apart from Flipkart, major Indian e-commerce players Snapdeal, Alibaba and Aditya Birla group's were in the race to acquire Jabong. Jabong's owners AB Kinnevik, a Swedish investment firm, and Rocket Internet were apparently looking to sell the company and exit India operations.

The owners were reluctant to infuse more capital into the e-commerce firm.

By the end of May, Jabong reported a 14 percent increase in revenue to €32.8 million during the March quarter. Jabong's earnings before interest, taxes, depreciation and amortization loss reduced to €11.9 million from €16.3 million during the same quarter in the previous financial year (2014-15).

Four months ago, Jabong received funding of Rs. 2 crore to help it remain afloat. Oliver Samwer, CEO of Rocket Internet and deputy chairman at GFG, was reportedly not in favour of continuing its India operations. However, Kinnevik insisted on backing the company and the board finally agreed to infuse the amount into Jabong.