EBay Inc (EBAY) said Monday that it will acquire e-commerce and marketing services firm GSI Commerce Inc. (GSIC) for $1.96 billion in cash and debt in a bid to draw more buyers and sellers to its online marketplaces. The purchase price of $29.25 a share represents a premium of about 51% over GSI’s closing price on Friday.
“The acquisition of GSI, which offers the most comprehensive integrated suite of online commerce and interactive marketing services available, will significantly strengthen our ability to connect buyers and sellers worldwide,” said eBay Chief Executive John Donahoe in a statement.
As part of the deal, EBay will divest 100% of GSI’s licensed sports merchandise business and 70 percent of ShopRunner and Rue La La, both of which, the company says are not “not core to its long-term growth strategy.” The assets will be placed into a new holding company run by GSI’s founder and Chief Executive Michael Rubin.
Also under terms of the deal, EBay will lend Rubin’s new company $467 million and retain a 30% stake in Web business Rue La La and ShopRunner. Including the loan, eBay said the acquisition was worth $2.4 billion.
EBay said the deal, expected to close in the third quarter of 2011, will generate about $60 million in “synergies” by 2013, with the deal accretive to its bottom line by next year. EBay also said the transaction would hurt 2011 net income by $0.30 cents to $0.34 per share.
Shares of GSI surged $9.69, or 50%, to $29.07, in morning trading. EBay shares dropped 2.62%, to $30.86.