This won’t be entirely eBay’s show; the effort will come in the form of a fresh joint venture in which eBay will have a 49 percent stake.  Young Bae Ku, the founder of Gmarket, will then control the other 51 percent.

Still, eBay feels the arrangement is more than satisfactory.  Lorrie Norrington, president of eBay Marketplaces, said in a statement that it should "enhance our long-term position and growth in the region."

Norrington also argued, "This joint venture is a sign of our continued commitment to help grow and lead ecommerce across Asia by offering more opportunities for sellers and extraordinary buying experiences for consumers."

(Another big sign came two months ago when PayPal decided to add 1,000 jobs in Australia, China, Hong Kong, India, Japan, Singapore and Taiwan, if anyone’s interested in keeping score.)

Anyway, it remains unknown when eBay will start benefiting from the new joint venture, as no target dates related to its launch have been shared.

Gmarket is known as Korea’s leading eCommerce business, and it will apparently be combined with eBay’s existing online marketplace in Korea, Internet Auction Company.

"The combination of Gmarket and IAC establishes an exceptionally strong leadership position for eBay in one of the world’s largest, most dynamic and innovative e-commerce markets," says eBay CEO John Donahoe said upon the original announcement. "This deal creates strong operational synergies between the two market leaders, offers more opportunities for sellers and enhances our ability to serve complementary consumer segments."

eBay shares details of the transaction:

Based on information provided by Citibank, N.A., the ADS Depositary for the tender offer, and Goodmorning Shinhan Securities Co., Ltd., the Common Share Depositary for the tender offer, a total of 50,496,693 common shares and ADSs, representing approximately 99.2% of the currently outstanding common shares and ADSs, were validly tendered and not withdrawn (including 557,006 common shares and ADSs tendered by guaranteed delivery procedures) in exchange for a purchase price of U.S. $24.00 per common share and per ADS, net to the seller in cash, without interest and less any required withholding taxes. All common shares and ADSs that were validly tendered and not withdrawn have been accepted for payment in accordance with the terms of the tender offer.

eBay also announced that it will provide a subsequent offering period of 25 business days for all common shares and ADSs that weren’t tendered in the initial offering period. that offering expires on July 20th, unless it gets an extension.

Research from IDC indicated a while back that Korea is the 6th largest eCommerce market in the world. According to those findings, only the US, Germany, the UK, China, and Japan are ahead.

Now eBay has made another huge announcement in that it is spending $1.2 billion to acquire all outstanding shares of Korea’s leading eCommerce business, Gmarket, which will be combined with eBay’s existing online marketplace in Korea, Internet Auction Company (IAC).

"The combination of Gmarket and IAC establishes an exceptionally strong leadership position for eBay in one of the world’s largest, most dynamic and innovative e-commerce markets," says eBay CEO John Donahoe. "This deal creates strong operational synergies between the two market leaders, offers more opportunities for sellers and enhances our ability to serve complementary consumer segments."

"We welcome eBay’s investment in Gmarket," says Gmarket president and CEO Young Bae Ku. "This transaction will provide us an excellent opportunity for our next growth stage in Korea and will also help accelerate our expansion strategies beyond Korea. We look forward to teaming up with eBay’s leadership both locally and globally to drive our future growth and expansion."

An eBay company blog post says that Korea is the 6th largest eCommerce market in the world according to IDC research. That’s behind the US, Germany, the UK, China, and Japan.

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.
 

The companies are waiting for approval from the Korea Fair Trade Commission, eBay spokesman Jose Mallabo said.

"There can be no assurance that the KFTC will approve the possible transaction, that an agreement will be reached or that a transaction will occur," Mallabo said in a statement.

Interpark is the largest shareholder in Gmarket and directly held 29.3 percent stake of the company along with Interpark’s chairman, Ki Hyung Lee who directly holds 7.3 percent as of December, according to Gmarket’s latest annual report filed in June.

Yahoo owns a 10 percent stake in Gmarket and if the KFTC approves the transaction, eBay would have a controlling share in the company.

Gmarket operates a market place similar to eBay and has more than 10 million registered users in South Korea, representing over a fifth of the country’s population of 48 million.

"The Korean market, due to its relatively more mature nature, is probably a good indicator of what’s to come in Asia as well as other markets, and this is mostly likely very valuable for eBay," RBC Capital Markets analyst Stephen Ju told Reuters.

Instead of continuing to compete with Gmarket, eBay will probably buy out remaining shareholders, Ju said.

In July, Gmarket posted a quarterly profit that beat market estimates, due to gains in its user base and the value of all products sold on the site.