eBay sells off classified ads business
Norway’s Adevinta has bought eBay’s classified advertisements business to create the world’s biggest online classifieds group.
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.
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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”.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
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