Norway’s Adevinta agreed to a $9.2 billion deal with eBay to buy off its entire classifieds unit, with the American firm expecting $2.5 billion in cash after the deal was struck between the two companies.
On Tuesday, eBay Inc agreed to sell its classified ads business to Norway’s Adevinta, making it the largest shareholder with a 44% stake and 33.3% of the vote, according to reports.
“Adevinta becomes the largest online classifieds company globally, with a unique portfolio of leading marketplace brands,” Adevinta Chief Executive Rolv Erik Ryssdal said.
The combined company will have a presence in 20 countries, with Europe its biggest market. It will have estimated revenue of $1.8 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) close to $600 million.
Reports revealed by a source state that Adevinta struck an attractive sweet deal with eBay over the weekend by offering the American firm a bigger stake, after the US firm’s board was initially split, with some members backing a $9 billion cash bid by online retailer Prosus.
Jamie Iannone, eBay’s chief executive, supported Adevinta’s proposal and persuaded the board to take it on according to the source.
Jamie Iannone, eBay’s chief executive, was very instrumental in supporting Adevinta’s proposal
Ryssdal told Reuters that the coronavirus crisis had boosted digital marketplaces, with some Adevinta sites receiving more traffic in June than a year earlier, rebounding from a sharp drop in March.
Ryssdal, who said he intended to stay in the chief executive role, said Adevinta would look for more acquisitions after completing the eBay deal, adding the combined company “would be a great platform to do that.”
The Norwegian company, which was formed from a Nordic media company in Oslo last year called Schibsted, its shares rose by almost 40%. Schibsted shares climbed about 20%.
Adevinta owns brands such as Leboncoin, France’s biggest online classified ads website, Brazil’s OLX and dozens more across Europe, the Americas and North Africa.
Norway’s Adevinta buys eBay classified ads unit at $9.2 billion
The eBay Classifieds Group includes the Gumtree and Kijiji brands and offers online ads to more than 1,000 cities around the world. The business posted an operating income of $83 million on revenue of $248 million in the first quarter of 2020.
The deal between the two companies is expected to close by the first quarter of 2021 and targets $150 million-$185 million in annual savings on EBITDA within three years.
According to Schibsted, the deal meant that their stake in Adevinta would fall to about 33% from 59%, but it would still have 39.5% of votes. Based on the reports, both companies will appoint two directors each to the expanded board of nine very soon.
Schibsted Chief Executive Kristin Skogen Lund told a presentation her firm intended to remain a significant shareholder in Adevinta but might sell part of its stake if it made further acquisitions.
“We will have larger liquidity and financial flexibility, but that doesn’t mean that we have any immediate plans (to sell),” she said.
As part of Adevinta deal, the US firm agreed to sell Schibsted the Danish assets of eBay classifieds group for $330 million, reducing the cash consideration from Adevinta to about $2.17 billion.
Citigroup advised Adevinta, while Barclays acted as lead financial advisor to Schibsted. Goldman Sachs and LionTree advised eBay.
Source: Live Mint
Author: Allan Bangirana
Allan Bangirana has a taste for all kinds of topics and usually writes about tech, entertainment, sports and community projects that make a difference in society.