eBay Inc., the global ecommerce major, has acquired a 5.44% stake in India’s ecommerce firm Flipkart. According to eBay’s quarterly report filed with the US Securities and Exchange (SEC,) the company received the stake in exchange for their Indian business, which was worth $ 211 million and a $ 514 million cash investment in Flipkart.
In the SEC filing, the company also mentioned it gained $ 167 million through the sale of its eBay India business. “The gain on disposal of our eBay India business of $ 167 million was recorded in interest and other net on our consolidated statement of income,” the company’s quarterly reported added.
The agreement between Flipkart and eBay India was made in order to move forward together and pursue cross border trade opportunities. The merger was completed in August this year after Flipkart raised close to $ 1.4 billion from global technology majors like eBay, Tencent and Microsoft. The merger provided all Flipkart users access to eBay’s global inventory while eBay users will gain access to a unique Indian inventory. According to sources, the Indian ecommerce major is also looking at using eBay India as a platform to sell refurbished goods globally.
Flipkart and eBay initiated merger talks after Flipkart’s plans of acquiring Snapdeal didn’t pan out. Earlier this year, eBay sold the majority of its stake in Snapdeal and invested in Flipkart by participating in a $1.4 billion investment deal. While Snapdeal lost significant market share in the Indian ecommerce industry, Flipkart claimed more than 50% of the market share.
Although eBay was launched in India two years before Flipkart, the global ecommerce firm lost the Indian market to new companies like Snapdeal, ShopClues, Flipkart and Amazon. In June this year, eBay and Flipkart received approval from the Competition Commission of India (CCI) for the acquisition of 100% share capital of eBay India. While Anil Goteti will head the eBay India business, eBay.in will continue to operate as an independent entity.