eBay To Buy Stake In Korean Retailer
eBay has plans to purchase a controlling stake in South Korean online retailer Gmarket for $413 million, at a 32.5 percent premium.
The move by eBay would help the online auctioneer to become a significant player in South Korea’s customer- to-customer online market by taking control of its key rival.
ebay will buy a 34.2 percent stake in Gmarket from its current top shareholder Interpark and Korean firm’s chairman, at $24 a share, according to unidentified sources.
eBay has been in talks to purchase Interpark’s stake in Gmarket since last summer. Cowen and Company analyst Jim Friedland issued a report at the time, writing, "We do not think that eBay is interested buying the entire company given its poor track record in operating wholly owned assets in Asia."
"However, we think it signals that eBay believes market share losses and margin declines at Internet Auction (eBay Korea) are irreversible and that the company is considering alternative strategies to benefit from Korean e-commerce growth."
South Korea’s antitrust watchdog gave eBay conditional approval for the deal. Gmarket currently has around 10 million registered users in South Korea. The site, along with its rival Internet Auction Co., controls 87 percent of the country’s online customer-to-customer market.
On Monday, Collins Stewart analyst Sandeep Aggarwal, downgraded eBay’s stock to a sell citing a decline in its core auction business.