After laying out an estimated $260 million in stock three years ago to purchase the West Coast auction house Butterfields, eBay has switched its modus operandi away from the expansive world of bricks-and-mortar auctioneering and sold Butterfields to London-based Bonhams Auctioneers.
EBay reportedly sold the auction house for only a fraction of what it paid years ago in an all-cash transaction.
The third largest auction house in the world, Bonhams has reportedly had its eye on Butterfields since eBay first snatched it up as part of a strategy to enter the high-end world of fine arts and pricey collectibles.
During the same year of frivolous spending, eBay also shelled out $100 million to acquire Billpoint, an online payment site, which it later ditched in preparation for its $1.5 billion purchase of PayPal.
After acquiring Butterfields, formerly Butterfield & Butterfield, eBay launched its Great Collections auction site as a platform for items brought in from Butterfields’ inventory. The site was later relaunched as eBay Premier, which collided head on with the dot-com bust, an economic slowdown, and lagging consumer interest.
The two companies also went reeling apart when managing Butterfields’ offline business affairs proved too challenging for eBay, coupled with its overall inexperience in the traditional auction space.
“We anticipated a much greater acceptance on the part of the consumers who buy high-end art and collectibles in 1999,” said Kevin Pursglove, an eBay spokesperson. “Perhaps we had not entirely gauged how much of a change in behavior would be required to make customers comfortable with purchasing high-end art and collectibles online.”
During the troubled three-year marriage, the centuries-old auction house saw its profits take a steep dive and eBay was reportedly forced to lay off more than half of Butterfields’ staff.
In January, pending the future sale of Butterfields, eBay partnered with the even more prestigious auction house Sotheby’s, but under different terms that didn’t burden eBay with offline business functions, and instead brought Sothebys.com into eBay’s marketplace where users could access high-end auction items from Sotheby’s network of dealers and regional auction houses around the world, as well as former eBay Premier dealers.
Prior to its partnership with eBay, Sothebys.com had been a sinking ship since its launch two years ago and had cost Sotheby’s $74 million to keep afloat.
The deal with Bonhams is not expected to include all of Butterfields’ assets or real estate, but it will provide Bonhams with a ticket into the North American marketplace where it currently has no presence. Bonhams is also expected to strike up a deal with eBay in the near future, although the terms were not disclosed.
According to Pursglove, eBay and Butterfield will also continue a relationship in which the West Coast auctioneer will pay eBay on a commission basis for items sold on its site.
