eBay Confirms iBazar Deal

As expected, eBay is continuing its push into Europe and indeed, the world, purchasing Paris-based online auction company iBazar S.A. in a stock deal valued at about $100 million.


The move was widely reported as early as 10 days ago. In the formal
announcement today, eBay said the move “redefines European online trading.”
iBazar claims 2.4 million registered users across the eight countries in
which it operates — France, Italy, Spain, Portugal, Sweden, the Netherlands,
Belgium, and Brazil.


Analysts at Goldman, Sachs said they believe the deal is positive “and
reinforces their leadership position on a global basis, expands market
opportunity, and enhances potential network effects for a global trading
platform.


eBay stock closed yesterday at $45.68 and was up $1.06 in early trading this
morning. The stock was down $2.37 in mid-morning trading.

eBay said its 2001 full year net income per share is expected to
decrease by four cents, with the largest impact occurring in the first full
quarter subsequent to the acquisition.


In a conference call this morning, eBay execs said that the European sites
are expected to achieve break-even in 12 to 18 months. The iBazar name will
remain for the time being.


“This deal is a tremendous step forward for eBay,” said Meg Whitman,
president and CEO of eBay. “In one strategic move we have increased our
pan-European footprint, as well as the strength of our global trading
community. Today we are much closer to realizing our dream of a marketplace
where people anywhere on the planet can seamlessly trade almost anything.”


Based in Paris, iBazar introduced online person-to-person trading in France
when it launched in October 1998. eBay said it will issue about 2.25 million
of its shares to buy the closely held company.


The acquisition is subject to various shareholder, government and regulatory
approvals and is expected to close in the second quarter of 2001. eBay said
the stock to be issued is subject to a minimum valuation of $66 million and a
maximum valuation of $112 million, based on the value of eBay stock when the
deal closes.


GS said that the deal gives eBay “dominance in France, greater penetration in
Italy and provide entry into six new countries.”


“We continue to believe eBay is a core Internet holding with a US Recommended
List rating,” GS analysts said in an advisory to clients. “We are
hard-pressed to find other technology stocks that have accelerating
fundamentals, strong top and bottom-line visibility going into a typically
strong quarter (1Q01) combined with a clear leadership position, and global
expansion
potential requiring little capital.

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