eBay are flogging off the last of their crown jewels divesting eBay Classifieds for about $9.2 billion, but unlike previous sales they’re keeping a foot in the game with a stake in Adevinta who are acquiring the business unit.
eBay Classifieds – The deal
In the $9.2 billion cash and stock deal eBay will become the largest shareholder of Adevinta. eBay gets $2.5 billion in cash and 540 million shares of Adevinta, representing 44% ownership of the company and about a 33.3% voting stake.
Having been mooted to be looking for a cash buyer, this represents a change in direction. The deal was also expected to be about $8 billion so $9.2 billion is a nice surprise.
eBay to keep a large interest in eBay Classfieds business
By taking a large share holding, eBay are not only avoiding a massive tax bill which would have been incurred with a cash sale, but they’re also protecting their position from competition. The eBay marketplace isn’t a classified ads site so doesn’t compete directly with eBay Classifieds but there are enough other classifieds sites which could potentially pivot to become marketplaces in the future.
Classifieds sites are to be honest a bit old hat having been around just about as long as the Internet itself, but many newcomers are mobile app based and hardly compete with traditional online sites. These are perhaps the biggest threat as from a consumer perspective, apart from the payment and collection, it’s hard to tell the difference between some marketplaces and some classified ads sites.
“We are pleased we reached an agreement with Adevinta that brings together two great companies. eBay believes strongly in the power of community and connections between people, which has been essential to our Classifieds businesses globally. This sale creates short-term and long-term value for shareholders and customers, while allowing us to participate in the future potential of the Classifieds business.”
– Jamie Iannone, Chief Executive Officer, eBay Inc
Will this sate activist investors thirst for breaking up eBay Inc?
This sounds like good news for the unpicking of partnerships between eBay Motors, Gumtree and Motors.co.uk in the UK and a similar arrangement in Australia. The press blurb says that “Adevinta and eBay will continue to partner in key areas post-closing to ensure a seamless transition. Additionally, the scale provided by this partnership is expected to create estimated annual synergies of $150 – 185 million within the next three years“.
How activist investors who have been pushing eBay to sell off Stubhub and eBay Classifieds will view the deal is yet to be seen – eBay have done as requested and flogged of the advertising division but they’ve not converted it into pure cash but kept shares. Whether that is viewed as ‘creating’ enough ‘shareholder value’ is yet to be seen. At the time of writing, in pre-market trading shares are up from $58.47 to $59.15.
Flipping the Danish properties
Adevinta is majority owned by Schibsted ASA, which has agreed to vote in favour of the transaction. Schibsted has entered into an agreement with Adevinta to acquire eBay Classifieds’ Danish entity and therefore leading marketplaces in Denmark, DBA.dk and Bilbasen.dk, once the transaction between eBay and Adevinta closes.
“With the acquisition of eBay Classifieds Group, Adevinta becomes the largest online classifieds company globally, with a unique portfolio of leading marketplace brands. We believe the combination of the two companies, with their complementary businesses, creates one of the most exciting and compelling equity stories in the online classifieds sector. We have been impressed with eBay Classifieds Group’s achievements in recent years, leading across markets with nationally recognized brands including Mobile.de, Gumtree, Marktplaats, dba, Bilbasen, Kijiji, 2dehands, 2ememain, Vivanuncios, Automobile.it, Motors.co.uk, Autotrader (Australia), Carsguide (Australia), and eBay Kleinanzeigen, and innovating consistently across its product portfolio and advertising technology platform.”
– Rolv Erik Ryssdal, CEO, Adevinta
What does the future hold?
Pretty much the only remaining business owned by eBay Inc is now the eBay marketplace (plus a few odds and ends such as Gmarket in Korea). The task now facing Jamie Iannone is to put activist investors back in their box for good as, with PayPal, Stubhub and eBay Classifieds sold, the only thing left to sell is eBay itself. There has naturally been speculation that eBay could be sold off at some point in the future but with a market cap currently around $40 billion and a record high share price it’s going to require a buyer with a large chunk of change.
Going private would have advantages for eBay – the ability to regenerate the marketplace without having to answer to shareholders and turn in a half billion dollars a quarter in profits would be a godsend. However in the short term that’s unlikely so, with the eBay Investor call scheduled for the 28th of July, it’s time to wait for Jamie Iannone to set out his stall and present a plan for the future growth of eBay.
8 Responses
That half billion dollars a quarter profit is made entirely off the backs of sellers.
Increasingly, it comes from dead fees such as shop and listing fees, so Ebay makes money even when you don’t sell.
Having recently made big cuts to their technical team, isn’t it time Ebay invested some money in its site to make it fit for purpose in 2020 ?
How about fixing the virtually constant minor outages and systems yips the bedevil the site?
How about fixing the dysfunctional checkout / basket / cart farce and give buyers and sellers one smooth uniform checkout experience, irrespective of browser or whether they’re on a phone or a desktop?
How about enabling visibility of items across all of Ebay internationally?
How about fixing the search so that buyers can find what they want and sellers have a fair chance of selling their items, without paying extra for the “privilege” of selling something on Ebay?
How about stopping the plague of poor quality Chinese items and drop-shippers that give Ebay such a poor reputation?
How about enabling buyers to easily find things delivered next day, like you can on Amazon Prime?
How about enabling repeat purchases automatically with a small discount as a thankyou to the buyer, like you can on Amazon?
How about getting CS up and running properly again, with full access instead of never-never call backs. Sellers are paying for this “privilege” too.
How about making sellers stakeholders in Ebay’s future instead of simply milking them?
How about making it fun to buy and sell on Ebay, like it used to be?
How about giving sellers a chance to earn a decent living again, free from all the complexity of conflicting feedback metrics and systems?
How about working with sellers, for once, instead of against them constantly?
How about making sellers feel that Ebay cares about them?
How about simply being fair?
…
How about asking sellers what they think, how categories should be organised, what features should be added – instead of fake pools “because sellers wants it” improvements ?
How about weeding out business sellers masquerading as private – eBay is losing money on fees and breaking law ?
How about blocking buyers from leaving negs on a whim ?
How about adding photos per combined result of variations – instead of 1st or last level – so buyers will know EXACTLY what items they’ll receive ?
How about sorting by delivery time ?
How about focussing on fixing this that are actually broken?
How about testing updates properly before rolling them out?
How about no major changes just before 4th quarter?
How about using some common sense in seller metrics and the handling of cases?
How bout producing the most relevant results for buyer searches?
How about doing things that actually improve the site longterm?
How about stopping with the short sighted shortterm money-grabs?
How about not constantly stressing your sellers out by changing just about everything just about all the time?
And last but not least, how about actually seeing your sellers as your customers and not your milking cows?
Did anyone even use Gumtree anymore anyway???. Facebook marketplace has taken over the classified ads and swept eBay aside pretty quick.
It is all very Gumtree still fb marketplace with no ability to checkout and instgram shopping is no good, but they do have the ability to turn it into a marketplace proper.
I mess about with it now and then and have actually sold more this week than on eBay (although I had to holiday mode it for 2 days)…folks all turned up and paid , no fees , no hassle, no Royal Mail. However they would have to allow a proper checkout and allow you to link you business profile for it to be more than buy and sell groups. It also drives traffic AWAY from eBay I think.
£40m is pocket change to Facebook…and they are losing advertising revenue.