By Cara Lombardo and Corrie Driebusch
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 5, 2020).
The owner of the New York Stock Exchange 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 Inc., 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 issued a statement late Tuesday confirming its interest in a
deal after The Wall Street Journal reported on it earlier in the
day and the company's shares sank.
"ICE approached eBay to explore a range of potential
opportunities that might create value for the shareholders of both
companies," it said. "EBay has not engaged in a meaningful
way."
It added: "Over ICE's 20-year history, the company's track
record of creating shareholder value, both through organic growth
and acquisitions, speaks for itself. ICE does look to explore
potential opportunities that it expects will deliver enhanced
shareholder value, and will continue to do so in the future."
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 about
$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.
Buying eBay would be a surprising strategic move for ICE, and
its shareholders didn't welcome the news. ICE closed down 7.5%
while eBay's stock soared, closing up 8.8%.
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.
About a year ago, the 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 handing the funds board
representation and late last year to sell StubHub to Geneva-based
Viagogo Entertainment Inc. for $4.05 billion.
The company has been without a permanent chief executive since
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 reported last week 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 such as 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 the Big Board's
expenses, 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 stage 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 become tougher because of the
increasing consolidation of the business and regulatory
obstacles.
In 2016, ICE explored an 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 05, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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