Press release
- GSI Commerce shareholders to receive $29.25 per share in cash
- Acquisition enhances eBay's position as the strategic global commerce partner
of choice for retailers and brands of all sizes
SAN JOSE, Calif. & KING OF PRUSSIA, Pa.--(BUSINESS WIRE)-- eBay Inc. (NASDAQ:EBAY - News) announced today that it has agreed to acquire GSI Commerce (NASDAQ:GSIC - News), a leading provider of ecommerce and interactive marketing services, for $29.25 a share, or total consideration of approximately $2.4 billion. The acquisition, which will be financed with cash and debt, is expected to close in the third quarter of 2011.
The merger consideration represents a 51 percent premium over GSI's March 25, 2011, closing price and a 47 percent premium over the average closing price of GSI Commerce common stock over the 30 trading days prior to March 28, 2011. The acquisition is subject to regulatory and GSI shareholder approval, as well as other customary closing conditions.
"We intend to lead the next generation of commerce innovation. The acquisition of GSI, which offers the most comprehensive integrated suite of online commerce and interactive marketing services available, will significantly strengthen our ability to connect buyers and sellers worldwide," said John Donahoe, eBay Inc. President and CEO. "Combined with eBay Marketplaces and PayPal, we believe GSI will enhance our position as the leading strategic global commerce partner of choice for retailers and brands of all sizes."
With more than 180 customers across 14 merchandise categories, GSI has long-term commerce services relationships with leading retailers and brands. We expect that GSI will benefit from eBay's global platform and technology capabilities, and its clients will be able to leverage eBay Marketplaces and PayPal services.
"Technology is changing how consumers shop, and retailers and brands are changing how they compete," Donahoe said. "With its complementary strengths, GSI will extend the power of our portfolio. With eBay, PayPal, GSI and our global platform capabilities, we are focused on delivering new ways for retailers and brands of all sizes - from sole proprietors to large merchants - to drive innovation, engage customers and help people shop anytime, anywhere and on any device."
As part of the transaction, eBay will divest 100 percent of GSI's licensed sports merchandise business and 70 percent of ShopRunner and Rue La La. eBay believes these businesses are not core to its long-term growth strategy. These assets will be sold to a newly formed holding company, which will be led by GSI founder and CEO Michael Rubin.
eBay expects the transaction to result in synergies of approximately $60 million by 2013; the company expects the transaction to be EPS neutral in 2011 and accretive in 2012. As part of the divestiture, eBay will loan the holding company $467 million and retain a 30 percent stake in Rue La La and ShopRunner. In addition, Michael Rubin will invest additional cash of $31 million in the holding company.
Under the terms of the merger agreement, GSI Commerce may solicit acquisition proposals from third parties for a 40-day "go-shop" period continuing through May 6, 2011. It is not anticipated that any developments will be disclosed with regard to this process unless GSI Commerce's Board of Directors makes a decision with respect to a potential superior proposal. The merger agreement provides eBay with a customary right to match a superior proposal. There is no guarantee that this process will result in a superior proposal.
Goldman, Sachs & Co. and Peter J. Solomon Company are acting as financial advisers to eBay, while Dewey & LeBoeuf LLP is acting as its legal adviser with regard to the transaction. Morgan Stanley & Co. Incorporated is acting as financial adviser to GSI Commerce and Davis Polk & Wardwell LLP is acting as legal adviser to the special committee of the GSI Commerce Board of Directors. Morgan, Lewis & Bockius LLP is acting as legal adviser to GSI Commerce.
Business Outlook
Assuming its acquisition of GSI closes mid-third quarter, eBay said it expects the deal to be immaterial to its 2011 non-GAAP EPS guidance which it announced January 19, and have a negative impact of $0.30 - $0.34 to its 2011 GAAP EPS guidance, including a GAAP charge primarily related to the divested GSI businesses.
Conference Call
eBay will host a conference call at 8 am Pacific Time/11 am Eastern Time today to discuss this announcement. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information, can be accessed through the company's Investor Relations web site at http://investor.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.
Transaction website
For more information on the transaction, including background information and factsheets, visit http://changingshopping.ebayinc.com.
About eBay Inc.
Founded in 1995 in San Jose, Calif., eBay Inc. (NASDAQ:EBAY - News) connects millions of buyers and sellers globally on a daily basis through eBay, the world's largest online marketplace, and PayPal, which enables individuals and businesses to securely, easily and quickly send and receive online payments. We also reach millions through specialized marketplaces such as StubHub, the world's largest ticket marketplace, and eBay classifieds sites, which together have a presence in more than 1,000 cities around the world. For more information about the company and its global portfolio of online brands, visit www.ebayinc.com.
About GSI Commerce
GSI Commerce® enables ecommerce, multichannel retailing and digital marketing for global enterprises in the U.S. and internationally. GSI's ecommerce services, which include technology, order management, payment processing, fulfillment and customer care, are available on a modular basis or as part of an integrated solution. GSI's Global Marketing Services division provides innovative digital marketing products and services comprised of database management and segmentation, marketing distribution channels, a global digital agency to drive strategic and creative direction and an advanced advertising analytics and attribution management platform. Additionally, GSI provides brands and retailers platforms to engage directly with consumers through RueLaLa.com, an online private sale shopping destination, and ShopRunner.com, a members-only shopping service that offers unlimited free two-day shipping and free shipping on returns for a $79 annual subscription.
