eBay: Classifieds Sold To Adevinta (ADEVF) For $9.2 Billion And Payment Management Scaling Up

By Amit Chowdhry ● July 21, 2020
  • eBay Inc (NASDAQ: EBAY) has made some major announcements. This includes selling its Classifieds business for $9.2 billion and management of payments scaling

eBay Inc (NASDAQ: EBAY) has made some major announcements this week. Adevinta ASA (OTCMKTS: ADEVF) will be buying eBay’s Classifieds business for a total consideration valued at approximately $9.2 billion based on the closing trading price of Adevinta shares on the Oslo Stock Exchange on July 17, 2020.

As part of the deal, eBay will receive $2.5 billion in cash and approximately 540 million Adevinta shares — which would represent an equity stake of approximately 44% based on the number of Adevinta’s outstanding shares as of the end of the second quarter (and about a 33.3% voting stake).

Adevinta is known as a global online classifieds specialist and is currently operating in 15 countries with a portfolio that spans 35 digital products and websites. And eBay’s Classifieds platforms include a collection of 12 brands in 13 countries around the world. These complementary businesses will have solid market positions in 20 countries globally and eBay will become the largest Adevinta shareholder.

Adevinta and eBay are going to continue to partner in key areas post-closing to ensure a seamless transition. And the scale provided by this partnership is expected to create an estimated annual synergies of $150 million to 185 million within the next three years.

The management teams of Adevinta and eBay Classifieds Group have a shared set of strategic principles, developed through a common history of acquiring and scaling generalist online classifieds platforms and successfully verticalizing them to create value.

The talent across the companies and the collective experience across the combined portfolio will serve to optimize strategies for the various assets at different stages of development thus accelerating monetization and creating value to consumers and advertisers.

The sale is subject to regulatory approvals, customary closing conditions. And the transaction is expected to close by the first quarter of 2021. Adevinta is majority-owned by Schibsted ASA — which has agreed to vote in favor of the transaction.

Along with this transaction, Schibsted has entered into an agreement with Adevinta to buy eBay Classifieds’ Danish entity once the transaction between eBay and Adevinta closes. Blommenholm Industrier AS — which holds approximately 6.3% of Adevinta’s ordinary shares — has also agreed to vote in favor of the transaction.

Upon the closing of the transaction, each of eBay and Schibsted will be entitled to designate two directors to the Adevinta board of directors so long as it holds at least 25% of the Adevinta ordinary shares and one director so long as it holds at least 10% of the Adevinta ordinary shares.

eBay’s equity stake at closing will consist of approximately 33% of Adevinta’s ordinary shares with the remainder of its stake consisting of non-voting shares.

Management Of Payments Begins Scaling Globally

eBay also announced that it is expanding its management of payments around the globe. And the company embarked on its journey to manage the end-to-end payments process on its marketplace platform in late 2018 and it has been seeing success with its rollouts in the U.S. and Germany.

Until now, the rollout has been paced by an Operating Agreement with PayPal — which governed how quickly eBay could scale its management of payments. And with this agreement now expired, eBay is free to move quickly with fully launching its management of payments, bringing customers one step further toward more of a seamless user experience and a more modern managed marketplace.

As of the end of Q2, eBay is already managing payments for nearly 42,000 sellers and has processed $4.7 billion in GMV in the U.S. and Germany. And most sellers can expect to see savings in managed payments with eBay saving sellers $17 million in transaction fees so far.

eBay managing payments will now streamline the experience of selling and getting paid on the platform, giving sellers an easier way to manage their business. And through managed payments, eBay is also able to provide buyers with more flexibility and choice in their payment options, offering options including credit cards, debit cards, gift cards and PayPal.

Apple Pay is available as a payment option on iPhone and iPad. And Google Pay is also available on the eBay site and on the eBay Android App. The company has also enabled SEPA direct debit as a payment option for buyers in Germany, Afterpay for buyers in Australia, and PayBright for buyers in Canada.

As eBay scales its management of payments, it will continue to enable new features and enhance capabilities, including adding options for seller financing and more bank payment options.

And the progress the company is making is right in line with expectations. Over the coming weeks, the company will be activating managed payments in the U.K., Australia, and Canada. And it has already begun registering hundreds of thousands of sellers in all of these markets for the experience. There are 255,000 sellers enrolled in managed payments globally.

eBay is on track to transition a majority of sellers on its marketplace into the experience in 2021 and complete the managed payments roll-out process in 2022. And the managed payments platform is expected to deliver $2 billion in revenue and $500 million in operating income in 2022.

Key Quotes About The Classifieds Deal

“We are pleased we reached an agreement with Adevinta that brings together two great companies. eBay believes strongly in the power of community and connections between people, which has been essential to our Classifieds businesses globally. This sale creates short-term and long-term value for shareholders and customers, while allowing us to participate in the future potential of the Classifieds business.”

— Jamie Iannone, Chief Executive Officer, eBay Inc

“With the acquisition of eBay Classifieds Group, Adevinta becomes the largest online classifieds company globally, with a unique portfolio of leading marketplace brands. We believe the combination of the two companies, with their complementary businesses, creates one of the most exciting and compelling equity stories in the online classifieds sector. We have been impressed with eBay Classifieds Group’s achievements in recent years, leading across markets with nationally recognized brands including Mobile.de, Gumtree, Marktplaats, dba, Bilbasen, Kijiji, 2dehands, 2ememain, Vivanuncios, Automobile.it, Motors.co.uk, Autotrader (Australia), Carsguide (Australia), and eBay Kleinanzeigen, and innovating consistently across its product portfolio and advertising technology platform.”

— Rolv Erik Ryssdal, CEO of Adevinta

“This deal is a testament to the growth and potential of the eBay Classifieds business. We are excited for our local classifieds brands to join Adevinta and shape a global leader in an industry full of potential.”

— Alessandro Coppo, SVP and GM of eBay Classifieds Group

“Schibsted’s Board of Directors and management strongly supports the agreement between Adevinta and eBay, as we are confident that it will further strengthen the value creation potential for Schibsted and the rest of Adevinta’s shareholders. Schibsted intends to continue to contribute to the value creation for all Adevinta shareholders as a significant long-term anchor shareholder.”

— Kristin Skogen Lund, CEO of Schibsted

Key Quotes About Management Of Payments Scaling

“Today marks a significant milestone for eBay on our journey toward a technology-led reimagination of our marketplace and provides a simpler and seamless experience for our buyers and sellers around the world. We have already seen incredible momentum with managed payments, and we expect it to deliver $2 billion in revenue and $500 million of operating income in 2022.”

— Jamie Iannone, President and CEO of eBay

“We’re dedicated to building a platform that helps our buyers and sellers thrive. By managing the payments process, we’re creating a simpler, more unified experience for our customers, and streamlining operations for our sellers with one place to sell and get paid.”

— Alyssa Cutright, Vice President of Global Payments at eBay