RealTime IT News

eBay's Korean Bid

Online marketplace eBay moved forward on its acquisition of Korean rival Internet Auction Co. (IAC) after nearly doubling its original offer.

The Internet mega-mall said it will buy nearly 3 million shares of the Korean online trading company for 125,000 Korean Won (about US$109) per share. In December, eBay made an unsuccessful go at IAC, offering 70,000 Won (about US$61).

The $325 million worth of shares, which are held by several institutional investors, represent more than 23 percent of IAC's outstanding shares, and they will raise eBay's stake in the company to 86 percent. San Jose, Calif.-based eBay plans to make an offer for all remaining shares at the same price.

Chris Donlay, an eBay spokesperson, said the move won't change the way IAC operates.

"Operations will continue the same, as has been the way we work with other international sites that are wholly owned," he said. "A lot of the decision-making happens locally, because the site depends on local market experience."

Donlay said that since 2000, when eBay first invested in IAC, his company offered some strategic direction but maintained a decentralized model. For such things as marketing, he said, "You want that to be relevant to the local market, so that's decided at the local level. There won't be a huge change there, because they're already adapting our experience to the local situation."

Donlay said that eBay hasn't decided whether it would take IAC private if it bought out all the public shares.

Steve Weinstein, a financial analyst with Pacific Crest Securities, said the acquisition is part of eBay's growth strategy.

"It will allow them to run IAC in a way that is more holistic with what they are trying to accomplish as a whole without potential conflicts of interest. As a separately traded company, the management of IAC has to go in the area that's best for IAC as a standalone, versus what's best for eBay. This deal lets eBay use it more completely as an asset."

What's best for eBay, he said, is to get a strong hold in the greater Asian market, rather than focusing only on Korea.

eBay is on an acquisition spree. In August, it completed its $50 million purchase of India's Bazee.com. It also took a 25 percent minority interest in Craigslist, the community bulletin board, for an undisclosed sum. In April, it bought out shareholders of mobile.de, a German auto classifieds site, for $149 million. Last year, it bought EachNet, a Chinese e-commerce operation, via two stock buys for a total of $180 million.

The company said the acquisition won't affect its financial guidance for the quarter or the year.