eBay Plans To Cut and Buy
The online retailer announced plans to slash 10 percent of the company’s current staff, and will acquire two online classifieds companies and an online payments business.
October 6, 2008
eBay Inc. has announced that it will make three acquisitions, and has plans to eliminate 1,600 jobs, or 10 percent of the company’s current work force.
The acquisitions include Denmark’s online classifieds companies Den Bla Avis and BilBasen for $390 million, and Bill Me Later, an online payments business headquartered in Timonium, Maryland for $820 million in cash and $125 million in outstanding options.
The series of transactions comes on the heels of eBay’s mottled history of making high-priced buys that haven’t always paid off. Most infamous among eBay's regrettable acquisitions was its $2.6 billion purchase of Skype Technologies SA in September 2005.
Bill Me Later was founded in 2000, and is lead by chief executive officer Gary Marino. Marino will remain with the company following the transaction, and will run Bill Me Later as a unit of PayPal. eBay acquired PayPal in July 2002 for $1.5 billion.
John Donahoe, president and chief executive officer of eBay, said, “Bill Me Later is a perfect complement to our portfolio; PayPal and Bill Me Later belong together. We now have a powerful combination of the two leading, complementary online payment products, each with proven benefits for consumers and online merchants. At an attractive valuation, our investment in Bill Me Later opens significant long-term growth opportunities.”
Bill Me Later is funded by Amazon, along with Chase Paymentech, Azure Capital Partners, First Data Corp, Crosspoint Venture Partners, GRP Partners, CIT Group Inc., Citigroup Corporate and Investment Banking, Citigroup, Equifax, T. Rowe Price, and Legg Mason Inc. eBay's acquisition of Bill Me Later is expected to close by the end of 2008.
The acquisition of the 13-year-old company that runs DBA, a top ten Danish website, will assist eBay in its push into Europe. The site, dba.dk, draws one million visitors per month.
Jacob Aqraou, general manager of eBay's global classifieds business unit, said, “The Den Bla Avis and BilBasen corporate cultures and approach to the user experience are a great fit within eBay’s overall Marketplaces business, which provides anyone, anywhere the e-commerce platform of their choice. We are committed to providing the ideal classifieds platform for Danish consumers to connect locally.”
eBay shares opened at $17.84 on Monday, down $1.10 from the company’s closing price on Friday.
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