Online auction site eBay Inc moved to bolster its ability to take on No. 1 Web retailer Amazon.com Inc with a US$1.96 billion takeover bid for e-commerce service provider GSI Commerce.
EBay would gain expertise in helping major retailers fill online orders and build relationships with big toy, electronics and book sellers that have helped Amazon grow.
EBay said on Monday it had offered GSI shareholders US$29.25 per share in cash, a premium of 50.9 percent from the stock’s closing price on Friday.
The deal would be eBay’s largest acquisition since it bought Internet phone company Skype for US$2.6 billion in 2005, and comes as growth in its main auctions business is slowing.
“It’s one of the few fulfillment operations that could rival Amazon,” BGC Partners analyst Colin Gillis said. “Amazon is fulfilling its third-party sellers more and more; eBay is all third-party sellers.”
Among GSI’s clients are Aeropostale Inc, Toys R Us and TJX Cos Inc’s Marshalls chain.
GSI, which owns Web businesses such as Rue La La and ShopRunner, also provides retailers with technology, payment processing and customer care services for their e-commerce operations.
Online shopping accounts for about 8 percent of total US retail spending, rising 11 percent during the most recent holiday season, according to data firm comScore, almost twice the pace of bricks-and-mortar sales.
EBay estimated last month that its online marketplaces unit is set to grow into a US$7 billion to US$8 billion business by 2013, from US$5.7 billion last year. In contrast, Amazon pulls in annual sales of more than US$30 billion.
While PayPal has been a growth driver for eBay, the company has struggled with other deals, such as its purchase of 28.4 percent of classifieds site Craiglist, which led to a court fight after eBay launched its own classifieds business.
Still, Fred Moran, an analyst with Benchmark Capital, called the price “reasonable,” saying it comes out to 13 times this year’s expected earnings before certain expenses, which he said “is right in line with the e-commerce peer group.”
EBay said the acquisition, expected to close in the third quarter, would have little effect on this year’s fiscal adjusted earnings forecast, and would boost next year’s earnings. The deal would hurt this year’s net income by US$0.30 to US$0.34 per share, the company said.
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