Flipkart buys eBay India for $1.4 billion, set to take on Amazon

Flipkart announced the largest funding round of $1.4 billion by bringing in three global tech gaints – Tencent, eBay and Microsoft

 Photo by Hemant Mishra/Mint via Getty Images
Photo by Hemant Mishra/Mint via Getty Images

NH Business Bureau

In a landmark deal in the country’s e-commerce space, Flipkart has acquired eBay India with a total investment of $1.4 billion. Flipkart’s largest funding round in its decade-long history was from three global tech giants – Tencent, Microsoft and eBay – at a post-transaction valuation of $11.6 billion.

With the eBay India buy, the fight consolidates in the Indian e-commerce space with Filpkart giving US-based e-commerce giant Amazon a run for its money in India.

“We are delighted that Tencent, eBay and Microsoft – all innovation powerhouses – have chosen to partner with us on their India journey,” said Flipkart founders Sachin Bansal and Binny Bansal on Tuesday in a statement. “This deal reaffirms our resolve to hasten the transformation of commerce in India through technology,” they added.

Flipkart’s already existing group of investors include Tiger Global Management, Naspers Group, Accel Partners and DST Global.

Since it was launched in 2007, Flipkart has been on an acquiring spree, buying out its rivals Myntra in 2014, and, in 2016, Jabong and PhonePe, a mobile payments app. Tuesday’s deal, however, dwarfs all the previous ones.

The San Jose-headquartered eBay’s investment is clubbed together with a strategic commercial agreement with Flipkart. “In exchange for an equity stake in Flipkart, eBay will make a $500 million cash investment in and sell its eBay.in business to Flipkart,” eBay said in a statement. Flipkart will own and operate the eBay.in business upon the close of the transaction, which is expected later this year. Upon the close of the transaction, Flipkart will acquire eBay’s buyers in India.

The largest investment of $700 million, however, comes from Tencent, a major internet value-added service provider in China. Tencent is expected to provide significant expertise of linking social networking with e-commerce to Flipkart.

Microsoft will partner up with a $200-million investment. It had recently signed an agreement with Flipkart to make Azure its exclusive public cloud platform.

Flipkart and eBay have also inked an exclusive cross-border trade agreement, through which the customers of Flipkart can have access to the wide range of global inventory of eBay and eBay customers will be able to reach the Indian inventory. In this way, sellers on both the e-commerce companies will now have access to a wider range of market.

Meanwhile, there has been speculation for some time on Flipkart buying out its another major Indian rival, Snapdeal. With speculations that Japanese giant SoftBank, one of the biggest investors in Snapdeal, of being keen on the deal, Flipkart’s next buy may happen sooner.

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