R.W. Baird Analyst Makes Case for Google (GOOG) Buying eBay

Should Google (GOOG) buy eBay? Private equity firm RW Baird seems to think so. In a think piece published Monday, Baird analyst Colin Sebastian noted Carl Icahn’s calls for eBay (EBAY) to spin off its fast-growing PayPal unit but said an acquisition of eBay by the search giant could be a more attractive option.

Sebastian said eBay could be better off selling its core business and its PayPal payments business to Google since the merger would unlock value for eBay stockholders and address what the analyst calls “Google’s Achilles heel,” referring to Google’s shortcomings in Payments and E-Commerce.

“With Carl Icahn recasting public debate around the ownership of PayPal, and the integration of commerce and payments more broadly, we believe one potential ‘home run’ opportunity missing from the discourse is a combination of Google with eBay/PayPal,” Sebastian wrote.

Sebastian, who went on CNBC to pitch his intriguing idea, believes the merger would allow Google and eBay to compete much more effectively with Amazon (AMZN), Apple (AAPL) and Facebook (FB).

“Together with eBay/PayPal, Google would be in a much stronger position to fend off well-capitalized competitors,” he said, while noting that the deal could be accretive up to 50 percent premium over eBay’s closing pps of $56.74 on March 14.

In midday trading, eBay rose 59 cents, or 1%, to $57.30, while Google climbed $20.63, or 1.73% to $1,193+.

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