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.

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