eBay buys GSI Commerce for $2.4bn
GSI Commerce goes for $29.25 per share to enhance e-commerce giants strategic position
GSI Commerce goes for $29.25 per share to enhance e-commerce giant’s strategic position
eBay Inc. announced today that it has agreed to acquire e-commerce and interactive marketing technology provider GSI Commerce for $29.25 a share, or around $2.4 billion (£1.5bn).
The move marks the latest in a number of big e-commerce software deals, as everyone – from eBay, with its e-commerce marketplaces to retailers like Morrisons, which recently acquired Kiddicare, and even IT giants such as Oracle, which last year paid $1bn for ATG – looks to consolidate on continued growth in the e-commerce sector.
Greater strategic reach
John Donahoe, eBay Inc. president and chief executive said his company intended to “lead the next generation of commerce innovation” according to today’s announcement.
“The acquisition of GSI, which offers the most comprehensive integrated suite of online commerce and interactive marketing services available, will significantly strengthen our ability to connect buyers and sellers worldwide," stated Donahoe. "Combined with eBay Marketplaces and PayPal, we believe GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes."
GSI claims long-term commerce services relationships with more than 180 retailer and brand customers across 14 merchandise categories.
eBay said that GSI will benefit from its global platform and technology capabilities, and that its clients will be able to capitalise on using eBay Marketplaces and PayPal services.
The US e-commerce marketplace provider also said the acquisition, which will be financed with cash and debt, is expected to close in the third quarter of 2011 subject to regulatory and GSI shareholder approval, as well as other customary closing conditions.
The merger consideration represents a 51% premium over GSI's 25 March 2011, closing price and a 47% premium over the average closing price of GSI Commerce common stock over the 30 trading days prior to 28 March 2011.
Divesting non-core businesses
As part of the transaction, eBay will also divest 100% of GSI's licensed sports merchandise business and 70% of ShopRunner and Rue La La. eBay said the businesses were not core to its long-term growth strategy. These assets will be sold to a newly formed holding company, which will be led by GSI founder and chief executive, Michael Rubin.
eBay expects the transaction to result in synergies of approximately $60m (£37.5m) by 2013; the company expects the transaction to be EPS neutral in 2011 and accretive in 2012. As part of the divestiture, eBay will loan the holding company $467m and retain a 30% stake in Rue La La and ShopRunner. In addition, Michael Rubin will invest additional cash of $31m (£19.4m) in the holding company.
Assuming its acquisition of GSI closes mid-third quarter, eBay said it expects the deal to be immaterial to its 2011 non-GAAP EPS guidance which it announced January 19, and have a negative impact of $0.30 - $0.34 to its 2011 GAAP EPS guidance, including a GAAP charge primarily related to the divested GSI businesses.
GSI itself recently acquired Vendornet, which provides multichannel retailers with a service to electronically integrate with suppliers for online ordering to minimise out-of-stocks. The Vendornet service is currently just launching in the UK.