eBay is selling its remaining shares in online classifieds business Adevinta to private equity firms Permira and Blackstone for $2.200 billion in cash and 20% equity, according to company statements. Adevinta had originally acquired eBay's own classifieds business in 2020, leaving eBay with $2.200 billion in cash and 540 million Adevinta shares. While the new deal still needs to go through regulatory approval, the e-commerce and auction giant expected it to close in the second quarter of 2024.
At the time it acquired eBay's classifieds business, Adevinta was majority owned by Norwegian publisher Schibsted. The company now intends to go private and made the offer to eBay for its remaining shares through a private Norwegian LLC, Aurelia Bidco Norway AS, which was created for the purpose of this deal.
The offering values eBay's total stake in Adevinta at about $4.300 billion, $1.500 billion more than the $2.800 billion valuation that circulated in media reports in September, eBay said. Adevinta shares had risen more than 21% about the possible Blackstone-Permira deal that was first leaked that month.
ebay before sold part of his stake in the classifieds company for $2.250 billion in 2021.
It will now sell half of its remaining shares for approximately $2.200 billion, in cash at closing, and with the remainder acquire a 20% equity stake in the recently privatized company. eBay said the funds will be used for "general corporate purposes" and says it remains committed to returning 125% of its cumulative free cash flow to shareholders through a combination of buybacks and dividends over the three-year period, until 2024.
Following the closing of the deal, Permira, Blackstone and their co-investors will have the right to purchase an additional number of Adevinta shares from eBay, further reducing eBay's ownership position to approximately 9,99%, the company also said. . The purchase price for those shares will be the same as what eBay will be paid for its Adevinta shares at closing, potentially earning it more than an additional $XNUMX billion.
The deal is another nail in the coffin of eBay's broader e-commerce ambitions. Over the years, the company has divested parts of its operation, including not only classifieds, but also payments with the PayPal spinoff and issuing bonds on the sale of its StubHub business in 2019. The classifieds, in particular, they are perceived as a vestige. from the early days of the web, before the rise of e-commerce giants like Amazon and other large online marketplaces. At the time eBay sold its business to Adevinta, it noted that classifieds had only generated revenue of $248 million in its most recent quarter, down 3%. Meanwhile, eBay's marketplace had generated $1.900 billion during that same period.
Today, classified ads compete not only with e-commerce sites but with many other places to get secondhand items, including online secondhand operations like Poshmark and places that connect shoppers with local sellers, like Facebook. Marketplace and apps like OfferUp. As a result of these changes, eBay has shifted its focus from auctions and classifieds to a large marketplace for all types of products, including collectibles like trading cards and sneakers. It has also invested in its ability to authenticate clothing and fashion items with the purchase of AI-powered Certilogo earlier this year.
In its latest results, eBay reported revenue of $2.500 billion. Non-GAAP net income was $545 million, or $1,03 per share, above analyst expectations.
