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EBay to purchase PayPal

EBay Inc, the world's largest Internet auctioneer, agreed to buy online-payment provider PayPal Inc for about US$1.5 billion after its own billing service failed to attract as many users and racked up losses. Shareholders in the biggest electronics payment services company will receive 0.39 a share for each share held, EBay said in a statement. That's an 18 percent premium to Friday's closing price of US$20. Shares of EBay, one of the few profitable Internet retailers, fell 7.1 percent after it said acquisition costs will cut earnings for several quarters. "I would not view it as being a wise move, certainly at the price paid," said Bob Takazawa, who helps manage US$1.1 billion in assets for CastleArk Management LLC, which had owned EBay shares. Takazawa said he would have favored the investment go toward opportunities to increase EBay's online marketplace, such as hiring more sales people to pursue corporate sellers.

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