EBay plans to buy e-commerce service provider GSI Commerce for $2.4bn (£1.2bn) to build up its online marketplaces as it ramps up its battle with Amazon.com. The move sees the online marketplace attempt to win more business from large store chains, an area of business in which rival Amazon excels. 29/03/2011 GSI, which is listed […]
EBay plans to buy e-commerce service provider GSI Commerce for $2.4bn (£1.2bn) to build up its online marketplaces as it ramps up its battle with Amazon.com. The move sees the online marketplace attempt to win more business from large store chains, an area of business in which rival Amazon excels.
29/03/2011
GSI, which is listed in the US on the Nasdaq exchange, owns web businesses such as Rue La La, which offers one-day-only web deals to members, and ShopRunner, a members-only shopping service that offers free postage.
It also provides retailers with technology, payment processing and customer care services for their internet shopping sites.
For eBay, which owns the PayPal payments system and its well-known auction sites and marketplaces, GSI is attractive because of its expertise in taking customer orders, managing them and filling them, an area of strength for Amazon.
As part of the deal, eBay will sell off GSI’s licensed sports merchandise business, as well as 70% of Rue La La, which offers one-day only web deals to members, and ShopRunner, a members-only online shopping service that offers free shipping.
EBay said those business were not important to its long-term growth strategy. Those holdings will become part of a new company run by GSI’s founder and chief executive Michael Rubin. EBay will lend Rubin’s new company $467m. Including the loan, eBay said the deal was worth $2.4bn.
EBay said the acquisition, expected to close in the third quarter of 2011, would have little effect on its fiscal 2011 adjusted earnings forecast, and would add to 2012 earnings. The deal would hurt 2011 net income by 30c to 34c per share, the company said.
GSI has until May 6 to solicit bids from other parties during the so-called “go shop” period.
While PayPal has been driving eBay’s growth for years, the company is also trying to lift its more familiar marketplaces unit — a high-margin business that connects online buyers and sellers — especially as Amazon, the world’s largest an online retailer, has enjoyed double-digit revenue growth.
The GSI deal follows a number of other e-commerce deals in recent months. Amazon expects to close its purchase of Quidsi, operator of diapers.com, around April 1.
