eBay Announces Two New Acquisitions, Cuts Workforce by 10%

eBayOnline auction provider eBay (EBAY) announced Monday two new acquisitions that according to the co. will significantly extend its leadership position in online payments and classifieds.

In payments, the company is acquiring the U.S.-based online payments business Bill Me Later Inc., a leader in the digital payments industry, for $820 million in cash plus approx. $125 million worth of outstanding options. The acquisition of Bill Me Later seems to complement the company’s online payment solutions portfolio where eBay already owns PayPal.

The online auction provider sees the combination of Bill Me Later with PayPal as the number one online-oriented payments brand. John Donahoe, eBay’s president and chief executive officer said:

We are making aggressive moves to strengthen our leadership positions in e-commerce and payments to competitively position our company for long-term growth. Bill Me Later is a perfect complement to our portfolio, a company that belongs with PayPal. 

Donahoe also added that at an attractive valuation, eBay’s investment in Bill Me Later opens significant long-term growth opportunities for the company. eBay expects its new acquisition to generate an estimated $150 million of revenue in ’09.

Bill Me Later will run as a business unit of Paypal and Bill Me Later CEO Gary Marino will report to PayPal president Scott Thompson.

The acquisition is expected to close in the fourth quarter of ’08 and adding to earnings in 2011.

eBay’s second acquisition announcement was in classifieds, where the company acquired Denmark’s leading online classifieds businesses Den Bla Avis and BilBasen for approx. 2.1 billion Kroner, or about $390 million in cash.

DBA, a top Danish website founded in 1995, attracts nearly a million visitors a month, with 275,000 new listings added each month, according to co.’s website. Jacob Aqraou, general manager, eBay global classifieds business unit said:

With more than 25 years of classifieds success in Denmark, Den Bla Avis and BilBasen are household names with Danish consumers and we’re very excited to welcome them and all of their employees to the eBay global classifieds portfolio.

eBay also announced today plans to cut its global workforce by 10%. The co. said the job cuts would affect 1,000 employees and several hundred temporary workers. The reduction is expected to incur restructuring charges of about $70 million to $80 million, mostly in the fourth quarter.

eBay’s $1.3 billion on acquisitions is aimed at bolstering its online payment and classified units as it tries to counter a softening U.S. economy. CEO John Donahoe while reiterating the fact that job cuts are never an easy decision to make, said the measures taken in combination with the new acquisitions should make a more agile co. out of eBay and draw buyers to its site for the holiday shopping season.

San Jose, Calif.-based eBay is scheduled to announce third-quarter results on Oct. 15.

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About Ron Haruni 1068 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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