EBay Continues Acquisition Spree With $2.4 Billion Purchase of GSI Commerce
EBay is buying GSI Commerce, which provides back-end e-commerce and marketing services to companies, for $2.4 billion.
At that large of a price tag, this is likely the company’s second largest acquisition, following closely behind its purchase of Skype for $2.6 billion in 2008.
EBay said it will fund the purchase through a combination of cash and debt and expects the deal to close in the third quarter.
For GSI, which currently helps more than 180 leading retailers and brands with their online e-commerce presence, it’s a more than fair price.
The acquisition represents a 51 percent premium over GSI’s closing price on March 25. The deal will have to be approved by GSI’s shareholders and go through customary closing conditions.
“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’s 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.”
As part of the transaction, eBay said it will sell off all of GSI’s licensed sports merchandise business and 70 percent of ShopRunner and Rue La La, a flash-sales site that GSI Commerce acquired in 2009. The assets will be sold to a new company led by GSI founder and CEO Michael Rubin.
GSI Commerce has also been fairly acquisitive over the years.
As far as some of the fine print, eBay said it expects the transaction to result in synergies of about $60 million by 2013 and for the transaction to be neutral in 2011 and positive in 2012.
As part of the divestitures, eBay said it will loan the holding company $467 million and retain a 30 percent stake in Rue La La and ShopRunner. In addition, Michael Rubin will invest additional cash of $31 million.