Wednesday, April 15, 2009

eBay Offers $1.2 Billion Cash For Korea’s Online Auction Site Gmarket

. Wednesday, April 15, 2009

By stockOzone team

After the announcement of getting rid off from Skype, Interne Online Auction site eBay Inc. offered to buy South Korea’s Gmarket Inc. for $1.2 billion in cash, seeking to expand in the world’s most connected Internet market after posting its first quarterly sales decline.

eBay agreed to buy 67 percent of Gmarket shares from investors. Yahoo! Inc. is a major investor in Gmarket. It is a speculation that eBay will make a general offer of $24 per share.

Gmarket would be combined with eBay’s Seoul-based unit Internet Auction Co., by this merger eBay will double their South Korean sales and build a platform for expansion in Asia. South Korea is the world’s sixth-largest e-commerce market after the U.S., Germany, U.K., China and Japan.

According to Kim Chang Kwean, an analyst at Daewoo Securities Co. in Seoul. “eBay probably found Gmarket’s business model attractive and is likely to leverage that to expand in other Asian countries … for Gmarket, it can also utilize eBay’s global network to enter overseas markets.”

Meanwhile revenue from EBay’s marketplaces businesses, including its namesake auction and fixed-price website, fell 16 percent to $1.27 billion in the fourth quarter. About 55 percent of the division’s revenue came from outside the U.S., compared with 54 percent a year earlier.

Gmarket, whose sales rose 25 percent to 279 billion won ($210 million) last year, saw the value of all goods sold through its website increase 23 percent to 4 trillion won in 2008. Last year the value of sales through Internet Auction was 2.8 trillion won.

According to eBay Chief Executive Officer John Donahoe “This deal creates strong operational synergies between the two market leaders, offers more opportunities for sellers and enhances our ability to serve complementary consumer segments.”

Internet shopping mall manager and e-commerce solution provider Interpark Corp. said today it sold 14.6 million shares of Gmarket to eBay for $350 million. Other investors that have agreed to sell include Interpark Chief Executive Officer Lee Ki Hyung.

On Wednesday eBay fell 0.4 percent to $14.32 in trading on the Nasdaq Stock Market. While Gmarket rose 3.2 percent to $19.96.

Disclosure: Author does not own any of the stocks discussed here.





Bookmark and Share

0 comments:

Post a Comment

 
Visit blogadda.com to discover Indian blogs