Norway’s Adevinta has bought eBay’s classified advertisements business for $9.2bn (£7.1bn), says Michael Cogley in The Daily Telegraph – creating the world’s biggest online classifieds group.
While Adevinta will pay $2.5bn of the purchase price in cash, the rest will come in the form of shares, making eBay Adevinta’s largest shareholder with a 44% stake. The hope is that by adding eBay Classified’s 12 brands in 13 countries to Adevinta’s 35 products in 15 countries, the Norwegian giant will be able to find savings of between $150m and $185m in “annual synergies”. The deal already seems to be paying off, say Richard Milne and Arash Massoudi in the Financial Times. Shares in Adevinta “rose by more than a third” shortly after it was announced, which for eBay lifted the paper value of the deal by “more than $2bn”.
This vindicates eBay’s CEO, James Iannone (pictured), who convinced directors at the weekend that the American e-commerce group should “retain exposure” to the classified advertisements business instead of acceptinga slightly lower all-cash offer of $9bn from its Dutch rival Prosus.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Iannone seems to have negotiated a “good valuation” for a business that’s “slower-growing than peers”, says Liam Proud on Breakingviews. However, it’s harder to see what Adevinta gets from it.
For instance, to achieve a 10% return on this investment, it will need to boost operating profit from last year’s $420m to $1.1bn – a big ask, “even if the pandemic boosts the number of people selling goods such as wardrobes online”.
-
Why did Labour take over British Steel – was it a good idea?The government has stepped in to take control, not ownership, of British Steel, citing national security and other factors. But does that make sense?
-
Should you invest in UK dividend stocks?UK dividends totalled £14 billion in the first quarter, falling 4.6% annually but still beating expectations. Which sectors were the top payers, and will Trump’s tariffs prompt cuts?
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
-
BP's 'long, painful decline' – and why next year could be even tougherOpinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global marketsOpinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
-
Falling revenues and mounting debt spell trouble for Jumia TechnologiesStruggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
-
Best of British bargains: cash in on undervalued companies in the UK stock marketOpinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
-
Building firm Keller presents low debt and ample scope for growthGeotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
-
PZ Cussons share price down 75% in last decade – why it's one to watchOpinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
