EBay to Sell StubHub in Deal to Create Global Tickets Giant -- 3rd Update

Date : 11/26/2019 @ 12:58AM
Source : Dow Jones News
Stock : eBay Inc (EBAY)
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EBay to Sell StubHub in Deal to Create Global Tickets Giant -- 3rd Update

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By Cara Lombardo and Corrie Driebusch 

EBay Inc. on Monday said it agreed to sell its StubHub business to Geneva-based Viagogo Entertainment Inc. for $4.05 billion, a deal that would create an international ticketing giant in the booming live-events business.

StubHub and smaller rival Viagogo are already among the largest players in the growing secondary market for sports, music and live-entertainment tickets, in which brokers and fans resell tickets purchased from primary vendors such as Live Nation Entertainment Inc.'s Ticketmaster.

While StubHub and Viagogo are both big online ticket resellers, StubHub is mostly present in North America, whereas closely held Viagogo is a significant competitor internationally -- particularly in the U.K. and Europe.

The deal would give the companies, which together sell hundreds of thousands of tickets daily across more than 70 countries, the benefit of scale in a $10 billion global resale market.

"The ultimate vision really is that fans can go to one place to buy any ticket for any event anywhere in the world in their own language and currency," Viagogo Chief Executive Eric Baker, a StubHub co-founder, said in an interview.

StubHub, the No. 1 competitor in the secondary-ticketing market, was founded in San Francisco in 2000 by Mr. Baker and Jeff Fluhr, both former Stanford Business School students. It essentially established the market for legitimate online resale of tickets. It has become so prolific as a destination for purchasing tickets that many fans don't realize it is a resale platform. The website had more than 240 million unique visitors last year and sold tickets valued at more than $4.75 billion.

EBay has owned StubHub since 2007, when it bought the business from Messrs. Baker and Fluhr for $310 million. StubHub accounted for about 14% of eBay's $2.6 billion of revenue in the third quarter.

Mr. Baker launched Viagogo in London in 2006. The company grew through partnerships with soccer, cricket, rugby and other sports leagues, as well as through ticketing for festivals and other music events.

Both companies have faced criticism over the years for selling tickets marked up well above face value.

The live-events business has been growing for several years as consumers, especially millennials, continue to shell out for premium experiences. Concerts, in particular, have been commanding record-high ticket prices amid rising demand for live shows.

StubHub faces competition from nimbler upstarts including Viagogo, Vivid Seats LLC and Seat Geek. Ticketmaster, the largest ticket seller, has been expanding its resale business, too.

The secondary ticketing market overall, meanwhile, has been contending with a more-aggressive primary ticketing market. Concert promoters, venues and teams have been pricing the most coveted seats and VIP experiences at a premium to capture more of the value of a ticket and squeeze out brokers.

Vivid Seats had been in discussions about buying StubHub, according to people familiar with the matter, a deal that many in the industry said would have consolidated market share and likely drawn antitrust scrutiny. Because of StubHub and Viagogo's largely complementary geographic businesses, industry experts don't expect significant regulatory hurdles.

"Versus other potential buyers, this does the most to maintain the status quo in the ecosystem," said David Goldberg, a former Ticketmaster executive and now senior adviser to private-equity firm TPG's growth-investing arm.

EBay decided to explore selling StubHub shortly after two activist investors surfaced in January and urged it to exit businesses unrelated to its core marketplace. The company agreed to consider selling StubHub and its internationally focused classified business. It also added board members as part of a settlement with the investors, Elliott Management Corp. and Starboard Value LP.

Elliott had said it believed StubHub could sell for between $3.5 billion and $4.5 billion, and eBay's classified businesses for between $8 billion and $12 billion.

In September, eBay CEO Devin Wenig stepped down, in part because of disagreement over selling StubHub and the classifieds business.

EBay in October warned investors it could report its first quarterly revenue decline in four years. The company also said sluggish sales of merchandise through its main platform helped cause a 57% year-over-year decline in third-quarter profit. Its shares have slumped since then but are still up on the year, and rallied 2.1% to close at $35.85 Monday. That gives the company a market value of about $29 billion.

EBay has been working for years to redefine itself as shoppers increasingly turn to their phones, showing little patience for scrolling through thousands of listings. The company touts that 80% of items on its website are new, with the bulk sold at a fixed price rather than being auctioned. It has rolled out improved search features and personalized recommendations and reviews.

The all-cash takeover, reported earlier Monday by The Wall Street Journal, was financed with cash on hand, debt underwritten by JPMorgan Chase & Co. and new equity funding from existing backers Bessemer Venture Partners and Madrona Venture Group.

Write to Cara Lombardo at cara.lombardo@wsj.com and Corrie Driebusch at corrie.driebusch@wsj.com

 

(END) Dow Jones Newswires

November 25, 2019 19:43 ET (00:43 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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