EBay to Sell Classified-Ad Business to Norwegian Firm for $9.2 Billion -- Update
July 21 2020 - 5:55AM
Dow Jones News
By Ben Dummett
EBay Inc. agreed Tuesday to sell its classified-advertising
business to Norway's Adevinta ASA for $9.2 billion in cash and
stock, in a deal that allows the online auction pioneer to refocus
on its core marketplace business while positioning it to benefit
from growth in the classifieds unit.
The deal comes as activist investors have pushed eBay, once a
highflying internet conglomerate with brands such as PayPal and
StubHub, to dismantle that structure and try to boost value by
simplifying its operation. The classifieds unit is one of the last
remaining businesses outside the company's core after it struck a
deal to sell its StubHub ticketing division last year.
The Wall Street Journal reported Monday that a deal was
close.
EBay will receive $2.5 billion in cash in addition to about 540
million shares of Adevinta, which is listed on the Oslo stock
exchange. The San Jose, California-based company will own a 44%
stake in the combined entity but hold 33% of the voting rights,
Adevinta said.
EBay's classifieds unit primarily operates internationally
across Canada, parts of Europe, Africa, Australia and Mexico. Its
platforms allow users to post goods and services in their local
communities, similar to Craigslist in the U.S.. Last year, the
division produced $1.1 billion in revenue, compared with $7.6
billion generated by its marketplace business.
EBay had been seeking to sell the unit since around February.
Its decision to retain a big stake in the combined entity under the
deal shows that newly appointed Chief Executive Jamie Iannone is
betting on ultimately generating a bigger return by maintaining a
say in the business with the option of selling down the position at
a future date.
Adevinta oversees digital marketplaces in 15 countries, with a
significant presence in parts of Europe, South America and Mexico.
By acquiring the eBay business, Adevinta would significantly expand
its presence in Germany, one of Europe's biggest economies, where
its current operation doesn't hold a dominant position.
The new entity's operations will have total annual revenue of
$1.8 billion, with a major presence in 20 countries. The deal is
also expected to ultimately boost annual operating profits by up to
$185 million, mostly through cost-cutting, Adevinta said.
Adevinta's stock was trading 36% higher in early trading.
The Adevinta deal now clears the way for eBay's Mr. Iannone to
focus on reviving the company's core marketplace business that has
suffered amid growing competition from Amazon.com, the U.S.'s
biggest online retailer. Mr. Iannone was formerly chief operating
officer of Walmart Inc.'s e-commerce division.
His appointment in April came as Elliott Management Corp. and
Starboard Value LP had been urging eBay to boost its share price by
shedding businesses the hedge funds had considered noncore. The
funds received board seats in settlement agreements and the clash
prompted Devin Wenig, eBay's former CEO, to leave the company in
September over disagreements on strategy.
Citigroup was the financial adviser to Adevinta. Skadden, Arps,
Slate, Meagher & Flom LLP, BAHR and Cleary Gottlieb Steen &
Hamilton were legal advisers. Goldman Sachs and LionTree were
financial advisers to eBay. Wachtell, Lipton, Rosen & Katz and
Quinn Emanuel Urquhart & Sullivan were legal advisers.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
July 21, 2020 05:40 ET (09:40 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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