EBay Inc said yesterday it intends to pay as much as US$1.2 billion for a majority stake in South Korea’s top online marketplace, potentially one of the company’s largest acquisitions, as it moves to expand in Asia.
San Jose, California-based eBay and Gmarket Inc said that eBay would make a cash tender offer of US$24 a share to purchase all outstanding common shares and US depository shares in the South Korean company. If the tender is successful, eBay would take a stake of at least 67 percent in Gmarket.
“Asia is a very fast moving market, fast growing market,” John Pluhowski, an eBay vice president, said in Seoul. The proposed acquisition “also allows us to build a platform for growth in [South] Korea, but also in regions throughout Asia and beyond.”
Pluhowski said the acquisition would be “one of the largest since the company has been acquiring companies throughout the decade.”
EBay acquired Internet communications service Skype for US$2.6 billion in 2005 and online payment company PayPal for US$1.3 billion in 2002.
News of the Gmarket deal comes two days after eBay said it intends to spin off Skype through an initial public offering, undoing an acquisition that puzzled analysts and which eBay struggled to justify.
EBay and Gmarket, which is unlisted in South Korea, made the announcement in a statement handed out Thursday in South Korea and released late Wednesday in the US. It said the agreement calls for eBay to combine Gmarket with eBay’s existing online marketplace in South Korea, Internet Auction Company (IAC).
“The combination of Gmarket and IAC establishes an exceptionally strong leadership position for eBay in one of the world’s largest, most dynamic and innovative e-commerce markets,” eBay president and chief executive officer John Donahoe said in the release.
South Korea is the world’s sixth-largest e-commerce market after the US, Germany, the UK, China and Japan, the release said. EBay acquired IAC in 2001.
Park Joo-man, South Korean country manager for eBay, said that Gmarket and IAC had a combined market share of about 36 percent in South Korea as of last year.
Separately, Yahoo Inc announced it had agreed to sell its approximate 10 percent share in Gmarket to eBay as part of eBay’s announced tender offer. Yahoo said it would maintain its other operations in South Korea following the sale.
EBay and Gmarket said they expect the deal to be closed during the second quarter of this year, contingent on final regulatory approval in South Korea.
EBay said in September it had received preliminary approval from South Korean regulators for its potential purchase of a stake in Gmarket. At the time, however, the deal was focused on eBay acquiring what it said was 37 percent of Gmarket shares held by South Korean online shopping and auction site Interpark Corp and its chairman.