VoIP In Detail

Apr

20th

With Korea Deal, eBay Tries Again in Asia

Author: | Files under Tech News

Internet retail giant eBay is going on the offensive in Asia. On Apr. 16, eBay said it had secured agreements to buy a 67 percent stake of South Korea’s Gmarket in a deal estimated to be worth as much as $1.2 billion.

The purchase will give eBay control of Korea’s two e-commerce heavyweights and help with eBay’s expansion into one of the world’s largest and fastest growing online markets. The San Jose company will own roughly 90 percent of all consumer-to-consumer e-commerce spending in the country, and 37 percent of its overall e-commerce, according to brokerage Woorie Investment & Securities. Korea’s Fair Trade Commission has signed off on the deal, but ordered eBay not to raise fees for three years.

Until a few years ago, eBay subsidiary Internet Auction was the leader in Korea and eBay’s big success story in Asia. At Internet Auction’s peak, it accounted for three-quarters of eBay’s revenues from Asia. But upstart Gmarket quickly gained a foothold, and by 2006 it was beating Internet Auction for market share. Last year, Gmarket sold $3.2 billion worth of goods, compared with Internet Auction’s $2.2 billion.

Global Sales Dip

The move is part of eBay CEO John Donahoe’s effort to increase revenue in coming years. EBay’s global sales declined for the first time in the fourth quarter of last year. The acquisition is expected to more than double eBay’s revenues in Korea immediately. Gmarket’s revenue stood at $220.8 million last year, when Internet Auction posted revenue of $161.2 million.

Donahoe, a former Bain & Co. consultant who took over the top job from Meg Whitman, said in a statement his strategy in Korea is important as the country is “one of the world’s largest, most dynamic, and innovative e-commerce markets.”

EBay is making a cash offer to buy all outstanding shares of Gmarket for $24…