eBay’s Acquisition Costs Soar Following Settlement With GSI Shareholders

In addition to the $2.4 billion eBay was already paying to acquire GSI Commerce, it has agreed to dole out more to settle claims that will now bring total merger costs to more than $3 billion.

The two companies, which announced the merger back in March, said today that GSI shareholders will receive an additional 33 cents a share to settle claims filed in Delaware state court. Previously, shareholders were expecting to receive $29.25 a share.

The terms of the settlement were not disclosed; however, eBay and GSI are dismissed from any additional claims related to the merger. The merger is now expected to close by Friday, subject to GSI shareholder approval and other customary closing conditions.

Settlements of this nature typically arise when shareholders don’t believe the company did its best to find the highest price for the company. Back on March 25, before the merger was announced, the acquisition represented a 51 percent premium over GSI’s closing price.

GSI Commerce, which provides back-end e-commerce and marketing services to companies, has long-term relationships with more than 180 leading retailers and brands. eBay expects that GSI will benefit from eBay’s global technology, including eBay Marketplaces and PayPal services.

As part of the transaction, eBay will divest 100 percent of GSI’s licensed sports merchandise business and 70 percent of ShopRunner and Rue La La. The assets will be sold to a newly formed holding company, led by GSI founder and CEO Michael Rubin. The divestiture is also expected to close on Friday.

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