eBay says "oui" to purchase of French auction site
In a widely expected move to expand its European presence, the giant online auctioneer agrees to buy France's iBazar for as much as $112 million in stock.
The acquisition, which was announced late Wednesday, will help eBay strengthen its expanding foothold in Europe. The San Jose, Calif.-based company, which has been eyeing France for some time, already operates in the United Kingdom, Germany, Austria and Italy.
iBazar, based in Paris, has been providing its online auction service for customers since October 1998. Under the proposed combination, eBay said it would gain iBazar's roughly 2.4 million registered members and the company's presence in a number of countries including Belgium, Brazil, France, Italy, the Netherlands, Portugal, Spain and Sweden.
During a conference call Thursday morning, eBay executives touted iBazar?s well-known brand and the company?s market appeal and strong momentum in Europe.
Through this transaction, "we anticipate eBay?s European business will grow faster and further in a shorter period of time," chief operating officer Brian Swette said. The acquisition accelerates eBay?s objectives set a year ago to branch out overseas, he said.
Already the dominant player in the online auction market, eBay recently has been gaining momentum on competitors. Rival Yahoo saw its listings drop after introducing fees on its auction site last month. Meanwhile, eBay's listings have largely remained stable, and the company has been expanding its services in the United States and overseas, despite a fee hike.
The company recently launched a joint auction section with online services company eLance in a move to open its marketplace to providers of services such as Web site development, graphics design and language translation. Last month, the auction giant bought a stake in South Korea's Internet Auction for $120 million.
Under terms of the iBazar transaction, eBay said the purchase price for all of iBazar's outstanding shares ranges from $66 million to $112 million, based on the value of eBay's stock at closing. eBay said it plans to issue approximately 2.25 million shares of its common stock as consideration to buy all of iBazar's outstanding shares.
Both companies said that based on preliminary estimates, the purchase price is also expected to include approximately $6 million for acquisition-related costs. The acquisition is expected to decrease eBay's 2001 full-year net income per share by 4 cents on a pro forma basis. The transaction, which is expected to have a nominal impact on eBay's 2001 revenue, is slated to close in the second quarter of 2001.
Last quarter, eBay posted an 81 percent increase in fourth-quarter revenue and reported earnings that soared past estimates. The company's gross merchandise sales--the value of all the goods and services traded on eBay--reached $1.6 billion during the quarter, up 79 percent from the same period in 1999. During the quarter, eBay added 3.5 million new members, bringing its total membership at the time to 22.5 million.
The final purchase price of the iBazar deal may vary from the estimates disclosed and will depend on several factors including the length of time it takes to finalize the transaction as well as the results of iBazar's operations for the period prior to close, the companies said. The deal is also subject to shareholder, governmental and regulatory approval.