Flipkart’s proposed acquisition of eBay India has finally received approval from the Competition Commission of India (CCI). CCI has given green signal to eBay Singapore’s subscription of compulsorily convertible preference shares (CCPS) issued by Flipkart.
In a tweet, the Competition Commission of India (CCI) said that it has approved “subscription by eBay Singapore of CCPS issued by Flipkart and acquisition of eBay India by Flipkart”.
@CCI_India approves subscription by eBay Singapore of CCPS issued by Flipkart and acquisition of eBay India by Flipkart
— CCI (@CCI_India) June 15, 2017
The transaction relates to the acquisition of 100 per cent share capital of eBay India by Bangalore based e-commerce firm Flipkart, and the acquisition of certain compulsorily convertible preference shares of Flipkart by eBay Singapore.
In the notice submitted to the CCI is regarding “the acquisition of certain compulsorily convertible preference shares of Flipkart, by eBay Singapore, and the acquisition of 100% share capital of eBay India, by Flipkart (“Proposed Transaction”). The Proposed Transaction is an acquisition and is notifiable under Section 5(a)(i)(A) of the Competition Act, 2002 (“Competition Act”).”
In April, the two companies agreed to jointly pursue e-commerce business in the Indian market. In an announcement, it was said that in exchange for an equity stake in Flipkart, eBay will make a cash investment of $500 million and sell its eBay India business to Flipkart.
This was announced as a part of the funding round in which Flipkart raised massive $1.4 billion from Microsoft, Tencent and eBay. With the funding round, the company’s post-money valuation stands at $11.6 billion. The round also witnessed the participation of its existing investors, which include Tiger Global Management, Naspers Group, Accel Partners, and DST Global.
Upon closing the deal, Flipkart will own and operate the eBay India business. However, as per the terms, eBay India will continue to operate as an independent entity.
The two companies 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, and will give eBay’s buyers access to the inventory provided by Flipkart.