The owner of the New York Stock exchange (NYSE) approached eBay with a take over offer which could have been north of $30 billion. The Wall Street Journal says that the two aren’t in formal talks and $30 billion bid for eBay negotiations have been dropped.
Now one approach has been made to eBay, the only question that remains is how many more there will be and if they will all be hostile without the blessing of the board or if someone will stump up the cash to effectively take eBay private.
The NYSE is effectively a marketplace for shares, so it’s not totally different to eBay’s business model, however there’s a huge difference between trading shares for a few thousand companies and trading over a billion discrete products from 6.7 million sellers to 168 million buyers on eBay around the world.
The interesting aspect to consider is what would an eBay acquisition bring to the marketplace? If eBay were no longer beholden to share holders the pressure to turn in more than half a billion or so dollars in profits on a quarterly basis would disappear. Would the pressure of having to turn in profits effectively allow eBay to press a reset button, totally revamp the marketplace, kiss goodbye to their current direction which is to squeeze ever more margin out of flat or decreasing sales, overhaul the technology and relaunch with a new direction?
Waving off profitability for a year would only be possible under private ownership – it would be a hard sell to investors to lay out a growth plan which ditches profits for a year when eBay’s recent history has been flat or very low growth. Amazon get away with it because they’ve shown distain for profits in favour of growth but eBay haven’t had stellar growth in recent years and so profits are all they have to offer investors.
There’s little doubt that now once possible acquisition has been made public that there will be more down the road and it would be no surprise to see the eBay marketplace sold in the near future. All that remains to discuss is if $30 billion bid for eBay didn’t tempt the board and investors what is the magic number that would? Is it $40 billion? $50 billion? Is it a waiting game and if eBay fortunes don’t improve then $30 billion might be more attractive. Will the numbers stack up if the StubHub sale is completed and Classifieds are also divested?
If eBay was taken private and you were in charge, what is the first thing you would do? Is it slashing fees or are fees not the underlying issue as you’ll happily pay them if the sales are flooding in? Is it the tech base and it’s time to totally revamp eBay’s 25 year old code base? Is it a direction swerve away from the new in-season stock to eBay’s roots of the quirky collectable that will get the buyers flooding back – which in itself is contentious as many sellers have built their businesses selling new products?
Where would you start? All ideas gratefully welcomed so long as they are constructive and will save eBay. Who knows, perhaps the current board and a new CEO could do the job without the eBay marketplace being sold off and effectively taken off the stock market and privatised.