In exchange for an equity stake in Flipkart, eBay will make a US $500 million cash investment in and sell its eBay.in business to Flipkart. Flipkart will own and operate the eBay.in business upon the close of the transaction.
eBay and Flipkart have also entered into an exclusive agreement in which they will jointly pursue cross-border trade opportunities to make eBay’s global inventory accessible to more India consumers, while eBay’s millions of active buyers globally will have access to more unique Indian inventory provided by Flipkart.
“The combination of eBay’s position as a leading global e-commerce company and Flipkart’s market stature will allow us to accelerate and maximize the opportunity for both companies in India,”said President and CEO of eBay Inc, Devin Wenig.
“eBay is committed to winning in India in partnership with Flipkart. Our exclusive global trade partnership will allow eBay and Flipkart to reach even more consumers around the world,” he further added.
“This partnership between Flipkart and eBay is the coming together of two pioneering innovators who have disrupted commerce by applying technology. It bodes well for Indian and global customers, sellers and the wider eCommerce ecosystem. eBay.in has built a strong presence in India over the years and we hope to take it to greater heights as part of the Flipkart group,” said Group CEO, Flipkart, Binny Bansal.
Upon the close of the transaction, which is expected later this year, Flipkart will acquire eBay’s buyers in India. eBay will remove the number of active buyers in India from its reporting during the quarter in which the transaction closes. eBay does not expect this transaction to have a material impact on its guidance provided on January 25, 2017.
Flipkart has raised US $1.4 billion from Tencent Holdings Ltd, Microsoft Corp and eBay Inc. Flipkart will have a valuation of US $11.6 billion after the latest funding round, which was its biggest ever, according to the company statement.
This investment adds to an existing group of investors that include Tiger Global Management, Naspers Group, Accel Partners and DST Global.
“This is a landmark deal for Flipkart and for India as it endorses our tech prowess, our innovative mindset and the potential we have to disrupt traditional markets. It is a resounding acknowledgement that the homegrown tech ecosystem is indeed thriving and succeeding in solving genuine problems in people’s daily lives across all of India,” said Sachin Bansal and Binny Bansal, founders of Flipkart, in a statement.
“This deal reaffirms our resolve to hasten the transformation of commerce in India through technology,” they added.
Tencent has joined the investment deal as a strategic investor, bringing experience in linking social networking and e-commerce. As a leading provider of internet value-added services in China, it has been at the centre of innovation in social, payments and other areas.
“Flipkart is a leader in e-commerce in India, with strong operational expertise and a deep understanding of user behaviour. This strategic partnership enables Tencent to participate in the exciting opportunities in e-commerce and payments in India.
“We look forward to helping Flipkart to deliver compelling experiences to users throughout India, and to contribute to the development of the internet ecosystem there,” said Tencent President Martin Lau.
Launched in 2007, the Flipkart Group includes well-known Indian brands such as Myntra, Jabong, PhonePe and Ekart, besides the parent company. The company offers over 80 million products across 80 plus categories.