eBay Acquires GSI Commerce for $2.4 Billion
eBay announced its plan to acquire GSI Commerce at $29.25 per share, or for $2.4 billion in cash and debt. This marks eBays second biggest acquisition to date, as it tries to handle e-commerce set-up for other large retailers and brands, in opposition to Amazon, who’s trying to compete with these retailers. “These large merchants are looking for help. They’re saying: ‘We need help with more than just payment,”’ said John Donahoe, eBay’s president-CEO. . The deal is expected to close Q3 of 2011 but still subject to regulatory and shareholder approval, and closing conditions.
“We intend to lead the next generation of commerce innovation. The acquisition of GSI, which offers the most comprehensive integrated suite of online commerce and interactive marketing services available, will significantly strengthen our ability to connect buyers and sellers worldwide,” said John Donahoe, eBay Inc. President and CEO. “Combined with eBay Marketplaces and PayPal, we believe GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes.”
eBay is expected to entirely strip off GSI’s licensed sports merchandise business to a newly formed holding company led by GSI founder and CEO Michael Rubin, but retaining 70% of ShopRunner and Ruelala. GSI currently has a promising partnership with leading retailers and brands with a total of 180 customers across 14 merchandise categories. GSI can make use of eBay’s worldwide platform and technology, as well as its clients with eBay Marketplaces and Paypal services.
“Technology is changing how consumers shop, and retailers and brands are changing how they compete,” Donahoe said. “With its complementary strengths, GSI will extend the power of our portfolio. With eBay, PayPal, GSI and our global platform capabilities, we are focused on delivering new ways for retailers and brands of all sizes – from sole proprietors to large merchants – to drive innovation, engage customers and help people shop anytime, anywhere and on any device.”
While eBay seems happy about the acquisition, its stocks dropped by $0.90 and is now valued at $30.81. This was said to have resulted from the announcement of GSI’s acquisition. eBay will pay GSI stakes holder $29.95 per share, equivalent to a GSI premium of 51% closing price on Friday.
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