Ebay gets 5.4 percent Flipkart stake in exchange of its India business and $500 million

By

Maverick Martins

Published
Oct 25, 2017

Global e-commerce major Ebay Inc has bagged a 5.4 percent stake in India’s largest marketplace Flipkart in return of its India business unit & $500 million (approx Rs 3256 crore) investment made into Flipkart earlier this year. The sale of its India business to Flipkart has also resulted in a profit of $167 million (approx Rs 1087 crore) for eBay Inc.
 

“During the third quarter of 2017, we received a 5.44% ownership interest in Flipkart in exchange for our Ebay India business and a $500 million cash investment, resulting in a cost method investment of $725 million. 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,” eBay Inc stated in US Securities and Exchange Commission (SEC) filings.
 
The Ebay-Flipkart deal was sealed in August this year after Flipkart had raised 1.4 billion dollars from Tencent, Microsoft, and eBay last April.  Ebay exchanged its India Company and invested $ 500 million dollars for an equity stake in Flipkart thereby making Ebay.in a Flipkart group company.

Ebay reported an 8 percent rise in gross merchandise volume (GMV) - the value of goods sold on Ebay websites to $21.7 billion in the just-ended third quarter. Revenue in the quarter increased 8.7 percent to $2.41 billion while net income rose 27 percent to $523 million.
 
The merger with Ebay has helped Flipkart compete with Amazon in the international market by giving its sellers an opportunity to sell its products to a global market in almost 200 countries where Ebay is present.

Kalyan Krishnamurthy, Flipkart’s CEO, in an official statement earlier had said, “Our coming together directly benefits Indian customers and sellers for whom we want to provide the best possible e-commerce experience. This is a step in that direction.”
 
The statement also mentioned that the two companies will also work together to leverage opportunities in trade across borders. In this way, the agreement will open up possibilities for Flipkart sellers to expand their reach internationally.