March 28, 2011, 4:46 PM — EBay has agreed to acquire for about $2.4 billion GSI Commerce, whose suite of e-commerce and digital marketing tools and services are expected to boost eBay's online marketplace and PayPal e-payment businesses.
EBay has offered to pay $29.25 per share and expects the deal to close in this year's third quarter, after obtaining regulatory and GSI Commerce shareholder approval, the company said on Monday.
The deal is primarily motivated by a desire to grow eBay's revenue, officials said during a press conference that was webcast.
In the past year, eBay's core marketplace business has struggled to grow, while PayPal has provided most of the company's revenue expansion.
GSI Commerce's products and technology "fit squarely in the direction" that eBay has identified as growth opportunities, eBay CEO and President John Donahoe said.
Specifically, GSI Commerce will bring long-standing relationships with its about 180 large retailer customers, which would help eBay gain a foothold in that segment of the market, beyond its core strength among individual sellers and small and medium-size merchants.
That could conceivably help eBay compete better against rivals like Amazon.com whose focus has traditionally been to partner with large, established retailers. GSI Commerce clients include Adidas, Calvin Klein, Levi's, Major League Baseball, Ace Hardware, Godiva, Radio Shack and Toys R Us.
"EBay is extremely interested in developing a portfolio of capabilities to compete against Amazon.com," said Leslie Hand, an IDC analyst.
In addition, GSI Commerce will help eBay provide new e-commerce services in emerging, high-growth areas, like mobile commerce, social commerce and the confluence of offline and online retail sales and marketing, Donahoe said.
For 2011, GSI Commerce will function as a separate business unit and focus on its existing goals, but later on it will be progressively meshed with the eBay marketplace and with PayPal.
For example, large eBay merchants may find GSI Commerce tools and services useful, while GSI Commerce customers may see opportunities to offload excess and discounted inventory on the eBay marketplace, officials said. There will also be a great opportunity to extend the use of PayPal among GSI Commerce customers as well.
The biggest potential benefit for eBay will be the ability to retain as customers the large and successful merchants that at some point break away and set up their own online storefronts, severing their revenue-sharing relationship with eBay, Gartner analyst Gene Alvarez said.
With the GSI Commerce services and products, eBay will improve its chances of holding on to those merchants, by offering them broad assistance with running their own e-store, including call center staffers, Web design, site hosting, digital marketing, order management and product fulfillment, he said.