EBay offers to buy Gmarket for $1.2 billion

(ATTN: UPDATES throughout with quotes, details; CHANGES headline; TRIMS)
SEOUL, April 16 (Yonhap) -- EBay Inc. said Thursday it has offered to take over
Gmarket Inc., South Korea's biggest online marketplace, for as much as US$1.2
billion, which would make the U.S. online auctioneer a dominant player in one of
the world's most wired nations.
The San Jose, California-based company said it has made a cash tender offer of
$24 a share to buy all outstanding common shares and American depository shares
in Gmarket.
The tender price is about 20 percent higher than Gmarket's closing price of
$19.96 in the U.S. tech-heavy NASDAQ stock market. Given all outstanding shares
of Gmarket, the value of the purchase price totals some $1.2 billion.
EBay Chief Executive Officer John Donahoe said he would combine Gmarket with
Intenet Auction Co. (IAC), the South Korean unit of eBay.
"The combination of Gmarket and IAC establishes an exceptionally strong
leadership position for eBay in one of the world's largest, most dynamic and
innovative e-commerce markets," Donahoe said in a statement.
"This deal creates strong operational synergies between the two market leaders,
offers more opportunities for sellers and enhances our ability to serve
complementary consumer segments," the chief executive added.
If all things go as planned, the deal will be completed by the second quarter of
this year, and shares of Gmarket will be delisted from the U.S. stock market.
EBay said it has already purchased a 67 percent stake in Gmarket.
Earlier in the day, Interpark Corp., the top shareholder of Gmarket, said it sold
its 29-percent stake in Gmarket for $350 million. Separtely, Yahoo Inc., a U.S.
Internet portal, said it sold its 10 percent stake in Gmarket.
In a press conference in Seoul, Lee Jae-hyun, head of eBay's Asia-Pacific
operations, said the U.S. online auctioneer would target the Japanese market
after completing the combining of Gmarket and Internet Auction.
"Japan is the first market for eBay to make inroads into along with Gmarket," Lee
told reporters.
The value of all merchandise trading on Gmarket's site was 3.98 trillion won
($23.28 billion) last year, compared with 3.1 trillion won for Internet Auction.
Lee said the combined online marketplace aims to increase the value to 10
trillion won.
Also, the two companies account for about 90 percent of online shopping in South
Korea, which has almost as many broadband connections as homes, with more than
15.4 million subscribers for high-speed Internet services.
EBay already received conditional approval for the deal from South Korea's
anti-trust regulator in September last year.
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.
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