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EBay to buy GSI Commerce for $2.4 billion

EBay said Monday that it will pay $2.4 billion for GSI Commerce, which operates websites for retailers like Toys R Us and Bath & Body Works.

which runs its namesake site where users buy and sell items through auctions and fixed-price “Buy it Now” formats as well as online payments service PayPal, hopes the acquisition will bolster its ability to connect buyers and sellers around the world. It could also help it become more of a threat to Amazon.com Inc.

EBay to buy GSI Commerce for $2.4 billion
EBay to buy GSI Commerce for $2.4 billion

EBay is working on improving its eBay.com website by doing things such as revamping its home page, cutting upfront listing fees it charges sellers and bolstering its search engine. In an interview, eBay CEO John Donahoe said the GSI deal fits in with his company’s efforts to help retailers grow.

“Commerce is at an inflection point where the lines between online and offline commerce are blurring,” he said. “We see retailers of all sizes, merchants of all sizes, looking for partners that can help them grow their businesses.”

Lots of businesses need help doing things like generating demand for products, running their websites, delivering goods to customers, and growing their mobile sales, Donahoe said. GSI does this for large companies, and eBay and PayPal do this for small- and medium-sized companies, he said, which makes the acquisition a natural fit.

According to the Brian Walker “the acquisition is a good move for eBay since it adds diversity to its business and gives the company access to larger merchants and merchant services that have traditionally shied away from selling on its site.It makes them a solution for large, regular-price retailers and consumer brands who would not see eBay or PayPal as solutions,”

San Jose-based eBay said it will pay $29.25 per share, a 51 percent premium to GSI’s closing stock price on Friday. The $2.4 billion total is the second-largest amount eBay has paid for another company thus far — in 2005 eBay paid at least $2.6 billion for Internet calling and messaging service Skype, which it has since sold.

As part of the acquisition, eBay plans to sell GSI’s licensed sports merchandise business and 70 percent of shopping sites RueLaLa.com and ShopRunner.com.It expects the acquisition of GSI to add to its earnings per share in 2012.

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Matthew

Matthew is a technology blogger for vritesh.com

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