eBay takes on the South Korean market with Gmarket

16 Apr 2009

Following the announcement of its first-quarterly sales decline, online auction site eBay has put in a bid to buy South Korea’s Gmarket for US$1.2bn.

eBay has made an offer price of US$24 per share — a 20.2pc increase on Gmarket’s closing price of US$19.96 in yesterday’s Nasdaq Stock Market composite trading.

This news comes in the wake of yesterday’s announcement from eBay that it was looking to spin off internet call service provider Skype.

According to eBay, it has agreed to buy 67pc of Gmarket, after investors Yahoo! and Korean online auction and shopping mall Interpark agreed to sell their stakes.

Interpark announced it would sell its 29pc holding in Gmarket to eBay for US$350m, while Yahoo! is selling its 10pc stake.

This move by eBay will increase its presence in South Korea – the world’s sixth-largest e-commerce market – and will also give it a stronger foothold in the fast-moving Asian marketplace in general.

“This deal creates strong operational synergies between the two market leaders, offers more opportunities for sellers and enhances our ability to serve complementary consumer segments,” said eBay CEO John Donahoe in a statement.

Up to now, Gmarket, which specialises in fashion, has been competing with eBay’s South Korean unit, Internet Auction, which focuses mainly on electronics and sports goods.

Under the deal, Gmarket will combine with Internet Auction, more than doubling eBay’s capacity for South Korean sales, and giving it the potential to achieve an 87pc stake in the country’s online customer-to-customer market. Gmarket saw its sales rise by 25pc to US$210m last year.

The deal is expected to close in the current quarter.

By Carmel Doyle