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eBay sells classified ads unit in $9.2B cash and stock deal

Jul. 21, 2020 7:01 AM ETeBay Inc. (EBAY), ADEVF, SBSNFSPY, XLY, EBAY, SBSNF, SBSNY, SBBTF, MKPEF, ADEVFBy: Yoel Minkoff, SA News Editor15 Comments
  • eBay (NASDAQ:EBAY) is selling its classified ad business to Norway's Adevinta (OTCPK:ADEVF) for $9.2B in cash and stock, making the latter the largest online classifieds company globally.
  • As part of the transaction, eBay will receive $2.5B in cash and approximately 540M Adevinta shares - representing 44% ownership of the pro forma company and a ~33.3% voting stake - and making it the biggest shareholder of Adevinta.
  • The deal is expected to close by Q1 of 2021 and is forecast to create estimated annual synergies of $150M-185M within the next three years.
  • Adevinta is majority owned by Schibsted (OTCPK:SBSNF), which has agreed to vote in favor of the transaction and will acquire eBay Classifieds' Danish entity.
  • The deal is the culmination of a process that began in March 2019 when the company agreed to a review of its classifieds business and StubHub, as activist hedge funds Elliott Management and Starboard Value pushed for a focus on eBay's core business to improve profitability.
  • eBay completed its sale of online ticket broker StubHub to Viagogo for $4B in February, but it has been flagged by U.K. regulators for further review.
  • eBay wanted to keep a stake in its online classifieds business, which includes Gumtree in the U.K. and Kijiji in Canada, putting Adevinta in pole position for the deal. Rival bidder Prosus was reportedly reluctant to to agree to a minority stake.
  • EBAY +2.5% premarket.
  • In the past 6 months, eBay shares have strongly outperformed benchmarks, up 63% vs. the S&P SPDR (NYSEARCA:SPY), off 2%, and the SPDR Consumer Discretionary ETF (NYSEARCA:XLY), up 6.2%.
  • The stock has an overall bullish rating from Wall Street analysts and Seeking Alpha authors.
  • Shares are "getting multiple boosts from transitioning the business to support small businesses and the surge in online sales from COVID-19," Stone Fox Capital wrote on Seeking Alpha.

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Comments (15)

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Smart, because Facebook Marketplace was killing them.
BuffteethrBlog profile picture
@SaaSGuy11 Yup. My wife and I normally sold my unwanted stuff on eBay but at the beginning of summer I decided to try Facebook marketplace. I have never liked the whole meeting in a parking lot thing but to my surprise I have sold practically everything we have put up on Facebook Marketplace without having to give eBay and PayPal a cut.
Not an ebay holder but politely curious - what's eBay's barrier to AMZN?

Seems to me AMZN just needs to add software to manage auctions (non-trivial work but just work) and that's the end of ebay....what am I missing?
elwalle profile picture
likewise....why couldn't EBAY take on Amazon?
@elwalle yeah why not walle, eBay just need to add an AWS-like cloud kingdom and that’s it. In fairy tales sometimes the smallest fish eats the shark
21 Jul. 2020
@Zatso? Auctions are not the point, today the vast majority of items sold in ebay are fixed price , also I don't think amz consider eBay a competitor these days they won the battle years ago if you look at market share of both companies . It's just amz doesn't need to defeat eBay they just need to grow faster than the market (e-commerce is still growing double digits and there is plenty of space for growth) and add new services to monetize further
elwalle profile picture
not a good idea selling that business.....long term mistake
21 Jul. 2020
Interesting move, eBay focusing on core business is probably the right choice considering also the current shift of consumers towards e-commerce, at the same time they keep a foot in the classified business by taking a stake in the newly formed company allowing them to explore synergies
Let’s go Team Vikings
Carson7 profile picture
Should be up big when market opens
@Carson7Well that little wish certainly didn’t come true. And especially on an up day.
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