7 Candidates For An eBAY Acquisition

There has been a lot of talk lately of what acquisitions eBay (EBAY) may pursue in the near future, particularly given its recent debt capacity increase. In this post, I briefly want to outline a few of the candidates that people are talking about (even if I don't necessarily agree with some).

Facebook. Currently number 2 social networking site in the world but catching up to Myspace very quickly. EBAY is already working to develop some apps for Facebook and a move like this would certainly mitigate buy.com's recent Garage Sale launch. This, however, would no doubt be an extremely expensive deal even for EBAY's standards.

Craigslist. Leading U.S. online classifieds business where EBAY already has a 25% stake. EBAY expanded Kijiji.com to include U.S. so they are now competing head to head. Craigslist founder Craig Newmark has stated he is not interested in selling out or even monetizing the site although with Kijiji gaining ground he may change his mind.

Yahoo! (YHOO). An acquisition, merger, strategic alliance has been rumored for years now. Yahoo! and EBAY are already partners in certain initiatives related to advertising and using PayPal but more meaningful integration could bring more muscle and substantial cost reductions. At a $32 billion market cap, this would also be a massive landmark deal.

Viagogo. Everybody agrees StubHub was a fantastic acquisition. Viagogo is the StubHub of Europe, interestingly founded by a founder of StubHub. Could he sell off to EBAY twice? To be fair, Viagogo is still far from mature but it is gaining traction quickly.

MercadoLibre. Leading auction business in Latin America (see a previous post) in which EBAY already has a 20% stake. MercadoLibre is supposed to be going public any day now so it's not clear how EBAY would go about increasing its stake other than through open market purchases at the moment.

IAC/InterActiveCorp (IACI). Stifel Nicolaus suggests EBAY may be interested in IAC, or at least parts of the company. IAC owns brands like Ask.com, Evite, Home Shopping Network, Match.com and Ticketmaster. It is perhaps more digestible with a market cap of under $8 billion although the company has given no indication it would support a sale.

ValueClick (VCLK)/Commission Junction. ValueClick has a market cap of around $2 billion, is trading near a 52 week low, and, among other things, manages EBAY's affiliate program through Commission Junction. It also has activities in comparison shopping and advertising solutions. This could be a nice fit with EBAY.

Any other ideas?

Comments

[Irish O"Iri...:]

also Celebrate Express

2007 Aug 10 03:08 PM

[d_schellhase:]

news.independent.co.uk...

Small Talk: Dotcom survivor is a Euro-rival eBay would do well to bid for
By Michael Jivkov
Published: 26 March 2007

The US online auctions giant eBay would do well to buy QXL Ricardo, its smaller London-listed European rival. After a several troubled years amid the fallout from the dotcom bubble, QXL has enjoyed a remarkable renaissance and is now in better shape than at any time in its 10 year history.

There is no doubt that the group is a serious opponent to eBay in some parts of Europe. In fact, in Poland, Switzerland, Norway and Denmark it is a clear market leader. And here are some even more surprising statistics. In Poland, QXL boasts a market share of 95 per cent versus eBay on just 2 per cent while in Switzerland its share stands at 70 per cent with eBay on 30 per cent.

QXL is a very profitable enterprise. For the year to the end of March 2006, it made £9m on sales of £29m. In the current year, profits are tipped to rise to £15m and again to £21m in 2008. However, these forecasts could prove conservative given its plans to expand into two or three more Eastern European countries this year. Broadband internet penetration in the region is rising fast, thereby greatly boosting the size of the market QXL addresses.

Moving into new territories should be relatively easy for QXL. The company has a flexible technology platform that can be transplanted easily and, importantly, at very little cost. In countries like Bulgaria, Slovakia, Croatia, Slovenia and Serbia, it would face no competition. All this means the financial risks associated with its expansion drive are small.
This is likely to be a big worry for eBay, but it need not be. The US giant could easily buy QXL and so put an end to all its problems in Europe. It boasts a market capitalisation of £22bn compared with £372m for QXL. By swallowing the group, eBay would not only remove a potential competiton in the battle for market share in eastern Europe but would overnight become the dominate operator in Poland, Switzerland, Norway and Denmark.

The US giant has a track record of making acquisitions in countries where it has not succeeded by itself. Having failed to make headway in the Sweden, it quit the country only to return in 2006 via the acquisition of Tradera, the country's biggest online auctioneer. Last year, eBay also bought Baazee.com, India's largest online market place. And it is not scared of paying top dollar for strategically important assets. It has been known to pay as much as 10 times sales for some companies. This equates to a take out price of 1,260p a share for QXL. On Friday, the UK group's shares closed at 870p.

In 2003, QXL stock traded as low as 6p. £1,000 invested in the company back then would be worth nearly £145,000 today. However, only the bravest of investors are likely to have done so as those were dark days for the company.

In January 2003, the group lost control of its key Polish division after a coup by the local management team.
The dispute was only resolved in June of last year. The price QXL paid to get back control of the unit - local managers were given a 24 per cent stake in the company - was criticised as being too high at the time.
Today it looks to have been well worth it. Should eBay make a bid for QXL, it will start to look like the deal of the decade.

2007 Aug 12 05:21 PM

[Off the Rad...:]

I would add Modavox (MDVX) to that list.

2007 Aug 13 11:18 PM