eBay goes on US$1bn spending spree – cuts 10pc of workforce

6 Oct 2008

Auction giant eBay today spent US$1.1bn on acquiring two internet companies that will add to its e-payment and classified business assets. However, it is axing 1,700 positions worldwide.

It emerged today that eBay is to spend US$820m in cash and US$125m in options to acquire the US online payments business Bill Me Later. It will also spend US$390m in cash to buy Denmark’s leading online classifieds business dba.dk.

However, eBay also announced a global rationalisation plan that will see its workforce cut by about 1,000 employees, plus a further 700 temporary workers.

The moves are aimed to reduce the company’s cost structure and make it more competitive.

It said it will take a restructuring charge of US$70m to US$80m in the fourth quarter.

“While never an easy decision to make, these reductions will help improve our operations and strengthen our ability to continue investing in growth,” said eBay’s chief executive, John Donahoe.

Donahoe described the acquisitions today as “aggressive moves” aimed at strengthening eBay’s leadership position in e-commerce.

“Bill Me Later is a perfect complement to our portfolio, a company that belongs with PayPal. Together, PayPal and Bill Me Later will make online payments safer, easier and more convenient than ever.

“Our classifieds acquisition gives us another market-leadership position in Europe for this rapidly growing part of our portfolio,” Donahoe said.

“We are the global leader in classifieds with top positions in Canada, Australia, Germany, Japan and the UK, and sites in more than 1,000 cities across 20 countries. The acquisition of dba.dk and bilbasen.dk gives us technology and expertise we can leverage across our classifieds portfolio to create better customer experiences,” he said.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years