SAN FRANCISCO: Online marketplace operator eBay Inc will pay US$2.4bil (RM7.7bil) for GSI Commerce, which operates websites for retailers like Toys R Us and Bath & Body Works.
eBay, which runs its namesake site where users buy and sell items through auctions and fixed-price “Buy it Now” formats as well as online payments service PayPal, hopes the acquisition will bolster its ability to connect buyers and sellers around the world. It could also help it become more of a threat to Amazon.com Inc.
GSI runs websites, packs and ships products and offers interactive marketing services to a variety of retailers. It has long-term contracts with 180 retailers, including Radio Shack, Ace Hardware and American Eagle Outfitters.
eBay has been working on improving its eBay.com website by doing things such as revamping its homepage, cutting upfront listing fees it charges sellers and bolstering its search engine. In an interview, eBay CEO John Donahoe said the GSI deal fits in with his company’s efforts to help retailers grow.
“Commerce is at an inflection point where the lines between online and offline commerce are blurring,” he said. “We see retailers of all sizes, merchants of all sizes, looking for partners that can help them grow their businesses.”
Lots of businesses need help doing things like generating demand for products, running their websites, delivering goods to customers, and growing their mobile sales, Donahoe said. GSI does this for large companies, while eBay and PayPal do this for small and medium firms, he said, which makes the acquisition a natural fit.
The purchase might also help eBay compete with Seattle-based Amazon, which, in addition to selling many items directly, allows merchants to sell their products through its site and offers product fulfilment services, too.
eBay is already involved with GSI through PayPal, which was integrated with GSI customers’ sites last year, Donahoe said. He hopes that the purchase will also result in some of the companies GSI works with selling their goods on eBay.com.
Forrester Research analyst Brian Walker said the acquisition is a good move for eBay since it adds diversity to its business and gives the company access to larger merchants and merchant services that have traditionally shied away from selling on its site.
“It makes them a solution for large, regular-price retailers and consumer brands who would not see eBay or PayPal as solutions,” he said.
The price seems high, he said, but it reflects the growing importance of the Internet and mobile commerce.
San Jose-based eBay said it will pay US$29.25 (RM93.60) per share, a 51% premium to GSI’s closing stock price on Friday.
The US$2.4bil total is the second-largest amount eBay has paid for another company thus far — in 2005 eBay paid at least US$2.6bil (RM8.3bil at today’s exchange rate) for Internet calling and messaging service Skype, which it has since sold.
As part of the acquisition, eBay plans to sell GSI’s licensed sports merchandise business and 70% of shopping sites RueLaLa.com and ShopRunner.com.
eBay hopes to complete the deal in the third quarter. It says its 2011 net income per share will be 30 cents to 34 cents (96sen to RM1.09) lower than its earlier outlook. In January, it had forecast earnings of US$1.56 to US$1.61 (RM4.99 to RM5.5) per share.
Its adjusted earnings won’t be affected. The company had forecast adjusted earnings of US$1.90 to US$1.95 (RM6.08 to RM6.24) per share in January.
The company expects the acquisition of GSI to add to its earnings per share in 2012. — AP
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