eBay Wants Half

Seeking to expand into fixed price person-to-person e-commerce, online auctioneer eBay Inc. is buying Half.com in a stock deal valued at between $311 million and $371 million.

The exact number of shares issued will be determined by a formula, but eBay expects it to be between 4.6 and 5.5 million shares. The company said the deal is expected to close in the third quarter following receipt of necessary approvals. It will be accounted as a pooling of interest.

eBay said the acquisition will result in significant increases in operating expenses for the combined company for the next several quarters but is expected to be accretive in 2001. eBay stock was down 2.9 percent in mid-morning trading Wednesday.

Half.com allows buyers and sellers to trade used books, CDs, movies and video games at fixed prices that are at least half off the list price. To trade on Half.com, a seller enters the ISBN for a book or a UPC for CDs, videos or movies, and then describes the condition of the item and sets a price. Buyers can purchase the item with a credit card. Half.com said it has grown rapidly since its launch in July, boasting 250,000 registered users and more than 4 million items for sale.

Josh Kopelman, president and chief executive officer of Half.com, was quick to point out that Half.com was not “built to flip,” or sell out to a larger company as soon as a good deal came along.

“You hear a lot about the west coast companies who are sort of built to flip, but we really view ourselves as building a long-term person-to-person trading opportunity,” Kopelman said. “What’s very exciting to us is the value and the assets that eBay could bring to bear to help us in that pursuit.”

“The primary focus is really to figure out a way to expand the company and continue to grow the member base and make sure the trajectory we’re on continues,” he added.

eBay said the strategic acquisition will mean more choices for its trading community of more than 12 million users.

“Half.com’s fixed-price format complements eBay’s current business by giving our existing users new choices for trading,” said Meg Whitman, eBay’s president and chief executive officer. “Half.com will also attract a whole new group of buyers and sellers to the world’s largest trading platform.”

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