In a press release, eBay said it notified Flipkart and Walmart of plans to sell its holdings in Flipkart, which will give the company gross proceeds of about $1.1 billion. Following on the closure of the transaction, eBay said it will end its “current strategic relationship with Flipkart.” It includes ending eBay’s commercial agreements with Flipkart and Flipkart’s licenses to use the eBay.in brand.
“We plan to relaunch eBay India with a differentiated offer to focus initially on the cross-border trade opportunity, which we believe is significant,” eBay said in the press release. “We believe there is huge growth potential for eCommerce in India and significant opportunity for multiple players to succeed in India’s diverse, domestic market.”
Walmart announced earlier that same day that it inked a deal to invest in Flipkart for $16 billion. In a press release, Walmart said the deal still needs the approval of regulators in India but, once that step is complete, the retailer will own 77 percent of Flipkart. The remainder of the business will be held by existing shareholders, including Tencent Holdings, Tiger Global Management, Microsoft and Flipkart Co-Founder Binny Bansal.
Doug McMillon, Walmart’s president and chief executive officer, said in the press release announcing the deal, “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market. As a company, we are transforming globally to meet and exceed the needs of customers, and we look forward to working with Flipkart to grow in this critical market. We are also excited to be doing this with Tencent, Tiger Global and Microsoft, which will be key strategic and technology partners.”
Under the terms of the deal, the investment in Flipkart includes $2 billion of new equity funding, which Flipkart will use to accelerate growth. The two companies are also in talks with other potential investors who could join the round, lowering Walmart’s investment stake once the deal is complete. Walmart noted that even with other investors, the retailer will still hold a majority stake in Flipkart. Tencent and Tiger Global will remain on Flipkart’s board, which will also include Walmart executives and independent members.