(News Focus) eBay eyes S. Korean online shopping monopoly

SEOUL, April 14 (Yonhap) -- EBay Inc. has been arguably the global powerhouse in
the electronic commerce field, but it has been eclipsed by a local stronghold in
one of the world's Internet-savvy nations: South Korea.
But the game plan is set to change as eBay reportedly nears a deal to acquire a
34.21 percent stake in the bigger South Korean rival Gmarket Inc. for US$413
million, or $24 per share after six months of negotiations.
The value of all merchandise trading on Gmarket's site was 3.98 trillion won
($3.02 billion) last year, compared with 3.1 trillion won for Internet Auction
Co., the local unit of eBay.
The two companies account for about 90 percent of the online shopping in South
Korea, which has more than 15.4 million subscribers for high-speed Internet
services, nearly as many broadband connections as homes.
"A monster of a 7-trillion-won online market is coming," said the nation's
mass-circulation Chosun Ilbo, referring the eBay's acquisition of Gmarket, early
on Tuesday.
John Donahue, chief executive of the San Jose, California-based eBay, visited
South Korea last week for negotiating final terms of the acquisition and the two
sides were due to announce a deal on Wednesday, the newspaper reported, citing an
industry source.
Officials at eBay's Korean unit or Interpark Corp., the top shareholder of
Gmarket, declined to confirm the report.
On Monday, Interpark said in a regulatory filing that it hasn't signed a "formal
deal" with eBay to sell the Gmarket stake.
"We will make an announcement if any deal is reached," the South Korean firm said.
In September last year, South Korea's anti-trust regulator gave preliminary
conditional approval for eBay's possible acquisition of the Gmarket stake.
The approval by the Korean Fair Trade Commission was considered a rare move
because it was made as price negotiations were underway.
"Rapid progress was recently made in negotiations between ebay and Gmarket," said
a source close to the matter. "Until they sign a contract, however, it's fair to
say there's no deal (yet) ."
Though it was a latecomer to the market, Gmarket rapidly gained appeal and
overtook eBay's Korean unit as the nation's top online retailer because of its
unique business model.
Unlike eBay, which lets people directly sell and buy new and used goods on its
Web site with minimal intervention, Gmarket is close to being a middle man by
helping sellers improve transactions and expand their scale of businesses.
Meanwhile, eBay's acquisition of Gmarket, if finalized, would deal a severe blow
to SK Telecom Co., the nation's largest mobile-phone operator which launched last
year an online marketplace called "11th Street," analysts say.
SK Telecom holds about seven percent of the online shopping market.
(END)