A PYMNTS Company

eBay Is Acquisition Target For NYSE Owner

 |  February 5, 2020

Intercontinental Exchange (ICE), the owner of the New York Stock Exchange, has reportedly made an offer to take over eBay in a move that might value the company at over $30 billion, according to The Wall Street Journal.

This isn’t the first time ICE has talked to eBay about a potential sale, and it happened again recently, according to WSJ. There have been no formal talks, and the takeover isn’t guaranteed. The deal would be worth billions, and ICE would probably have to pay a premium.

ICE wants to take over eBay’s core marketplace business and not the company’s classified unit, which eBay had reportedly said it was considering selling. Analysts said the classified unit could be sold in the area of $10 billion. ICE could potentially want to use its own technology connecting buyers and sellers to eBay’s site.

Activist investor group Starboard Value recently sent eBay a letter saying that eBay should sell its online classified unit. Starboard was instrumental in getting eBay to jettison StubHub last year at a price of $4.05 billion. Apparently, the company has been pressuring eBay for around a year.

In September, German publishing house Axel Springer reportedly made an offer, but a deal never actually happened. The online marketplace’s classified business made $269 million in fourth-quarter revenue, which is up 3 percent as reported and 6 percent on an FX-Neutral basis.

Starboard said the company should pivot and pay more attention to its core business to continue to build shareholder value.

“For much of the last year, the Company attempted to rationalize maintaining the current portfolio structure by alluding to the fact that eBay gains ‘a few hundred million dollars’ worth of trade’ by having Classifieds in the eBay portfolio,” the letter said. “While that is a compelling soundbite, when we apply the core Marketplace take rate to that value, it becomes inconsequential, especially in comparison to the potential value creation opportunity. In fact, an argument could be made that in the current structure, Classifieds is actually owned by a competitive business, hindering both the core Marketplace business and Classifieds. In many markets, Marketplace and Classifieds are competing for the same customers and same product listings. If the businesses were separate, both would be better equipped to attempt to acquire customers and grow without this complication.”