Intercontinental Exchange Makes Takeover Offer for eBay -- Update
February 04 2020 - 4:17PM
Dow Jones News
By Cara Lombardo and Corrie Driebusch
New York Stock Exchange owner Intercontinental Exchange Inc. has
made a takeover offer for eBay Inc. that could value the sprawling
online marketplace at more than $30 billion, according to people
familiar with the matter.
Intercontinental Exchange, known as ICE, has approached eBay in
the past and did so again recently, the people said. The companies
aren't currently in formal talks and there is no guarantee eBay
would agree to a deal.
Should there be one, it would be big, given eBay's market value
of more than $28 billion and the premium ICE would likely have to
pay.
ICE is primarily interested in owning eBay's core marketplace
business, the people said, and not its classified unit, which eBay
has been considering selling. The classified unit could fetch
around $10 billion in a sale, people familiar with the matter have
said.
ICE may see an opening to apply its technological expertise
connecting buyers and sellers to eBay's core e-commerce site
covering everything from electronics to collectibles.
EBay shares soared on news of the possible deal, first reported
by The Wall Street Journal, and were up more than 7% in afternoon
trading Tuesday. Intercontinental Exchange stock fell more than 5%
as investors digested the possibility of another huge bite by the
acquisitive company.
EBay was a pioneer in e-commerce but has struggled to keep up
with competitors such as Amazon.com Inc. The company has sought to
distance itself from its reputation as an online auction house --
as opposed to an electronic marketplace -- as online auctions have
fallen out of vogue. As the luster it enjoyed in the dot-com era
has worn off, eBay has attracted the attention of multiple activist
investors in recent years including Carl Icahn, who pushed for its
2015 spinoff of the payment platform PayPal Holdings Inc.
Roughly a year ago, activist hedge funds Elliott Management
Corp. and Starboard Value LP urged eBay to consider selling both
its StubHub ticketing and classified-ads businesses. EBay later
struck settlement deals that handed the funds board
representation.
EBay late last year agreed to sell StubHub to Geneva-based
Viagogo Entertainment Inc. for $4.05 billion.
The company has been without a permanent chief executive since
former CEO Devin Wenig left in September, citing clashes with the
board. Unfilled executive ranks are often seen as opportunities for
suitors to pounce.
"In the past few weeks it became clear that I was not on the
same page as my new board," Mr. Wenig tweeted from his personal
account following his resignation. "Whenever that happens, its best
for everyone to turn that page over."
EBay last week reported a declining profit in its latest quarter
and gave a weaker-than-expected first-quarter revenue outlook. Its
shares lost 4.5% the following day and closed Monday at $34.39.
On its earnings call, when asked by an analyst if eBay's core
business is part of the company's strategic review, interim Chief
Financial Officer Andrew Cring said "Everything is part of it."
On Tuesday, Starboard published another letter to eBay
management saying the company hasn't made enough progress and
called on it to commit to a separation of its classifieds
business.
ICE is best known for operating the NYSE as well as futures
exchanges around the world. Chief Executive Jeffrey Sprecher
founded the company in 2000 and has turned it into a global
exchange empire by acquiring stock and futures markets including
the London-based International Petroleum Exchange in 2001 and the
Chicago Stock Exchange in 2018. ICE also runs a number of
financial-data businesses and clearinghouses for derivatives
trades.
Acquiring eBay would be an unusual move for Atlanta-based ICE,
which in its 20-year history has largely stuck to running
marketplaces for financial instruments like stocks and derivatives,
rather than the sorts of consumer goods sold on San Jose,
Calif.-based eBay's platform.
Still, ICE has a history of buying underperforming trading
platforms and making them more profitable. Since closing its
acquisition of the NYSE in 2013, it has slashed expenses at the Big
Board, revamped its outdated trading systems and spent tens of
millions of dollars on renovating the exchange's historic building
in Manhattan to make it a splashier place to host initial public
offerings.
ICE's interest in eBay comes as the traditional way that
exchange groups have grown -- through cross-border takeovers of
rival market operators -- has gotten tougher, due to the increasing
consolidation of the business and regulatory obstacles. In 2016,
ICE explored a possible offer for London Stock Exchange Group PLC,
but retreated, allowing Deutsche Börse AG to pursue a bid for the
LSE that was ultimately scuttled by European Union regulators. In
2017, ICE was forced to unwind its acquisition of Trayport, a
European energy-trading platform, after opposition from U.K.
antitrust authorities.
--Alexander Osipovich contributed to this article.
Write to Cara Lombardo at cara.lombardo@wsj.com and Corrie
Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
February 04, 2020 16:02 ET (21:02 GMT)
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