eBay knows what it’s like to encounter friction as a seller – though not on its own marketplace. eBay was initially thwarted in a $9.2 billion deal to sell its Classifieds unit to a company called Adevinta when UK regulators raised competitive concerns in February.
The Competition and Markets Authority (CMA) had said it believed the deal could lead to higher prices and less choice for consumers.
In March, eBay and Adevinta agreed to sell three of their UK units – Shpock, Gumtree (UK), and Motors.co.uk – in order to ease regulators’ concerns, and today, the CMA cleared the way for the deal to go.
Adevinta posted the news on its site and also announced it had reached an agreement to sell Shpock to Russmedia Equity Partners in a transaction expected to close today.
Adevinta also said it “continues to target completion of the acquisition of eBay Classifieds Group in Q2 2021, subject to regulatory approval in Austria.” That gives it until the end of the month to complete the deal.
eBay had originally said last year that, after transferring its Classifieds business to Adevinta, it planned to take an equity stake of approximately 44% based on the number of Adevinta’s outstanding shares and an approximate 33.3% voting stake – read the full announcement for the complete terms it had laid out last July. (It’s unclear if the CMA hurdle affects those percentages.)
In April, eBay and Adevinta updated some information for their respective shareholders.
eBay’s Chief Financial Officer told Wall Street analysts during its first-quarter earnings call that the valuation of the transaction with Adevinta was $9.2 billion when announced in July 2020 (based on a mix of cash and the value of Adevinta shares at that time), and said, “As of April 27th, the Adevinta share price had appreciated by nearly 37%, which increased the value of the deal to over $12.7 billion.” (See transcript on SeekingAlpha.com.)
The CFO noted that eBay expected the cash portion of the transaction to provide approximately $2 billion net of tax.
Adevinta said in an April 6, 2021 press release (GlobeNewswire.com) that upon completion of the eBay Classifieds Group, Adevinta would have leading market positions in 16 countries covering one billion people and with around three billion monthly visits.