eBay offers $1.2 billion for Korean online auctioneer Gmarket

Following up on its acquisition of a controlling stake in Gmarket 3 days back, online auctioneer eBay Inc. today said it will pay up to $1.2 billion to buy South Korea's largest online marketplace in a move to expand its Asian operations. (See: eBay buys 34.2-per cent stake in Gmarket for $413 million)

Under the terms of the deal, San Jose, California-based eBay will make a cash tender offer of $24 per share for all outstanding shares, common shares and American Depository Shares. The purchase price will be up to $1.2 billion if all outstanding shares are tendered. EBay said it has already clinched agreements to purchase at least 67 per cent of the Gmarket's shares.

"This deal creates strong operational synergies between the two market leaders, offering more opportunities for sellers and enhances our ability to serve complementary consumer segments," said eBay CEOJohn Donahoe.

eBay plans to combine Gmarket with its South Korean unit Internet Auction Co., more than doubling its sales in the country and gaining local expertise that may allow further Asian expansion. The company is looking for growth outside the US, where it is losing e-commerce customers to Amazon.com Inc.

South Korea is the world's sixth-largest e-commerce market after the US, Germany, UK, China and Japan, according to eBay. In Asia, eBay's units operate in India, China and Taiwan. The company also has partnerships in Japan and Thailand.

Gmarket, whose sales rose 25 per cent to 279 billion won ($210 million) last year, saw the value of all goods sold through its Web site increase 23 percent to 4 trillion won in 2008. The value of sales through eBay's Internet Auction was 2.8 trillion won last year.

In August, EBay said it was considering buying a minority stake in Gmarket. In September, it received approval from the Korea Fair Trade Commission to purchase the company's shares. (See: eBay seeks stake in South Korean online retailer Gmarket)

eBay said it would probably complete the purchase in the second quarter. eBay plans to delist Gmarket from the NASDAQ following the deal.