eBay on the Verge of Classified Ad Unit Sale

Trading in shares of Adevinta was halted on the Oslo Stock Exchange Monday morning following reports that Europe’s largest classified marketplace was about to announce the acquisition of the classified ad business of eBay Inc. (NASDAQ: EBAY | EBAY Price Prediction). The deal is reportedly worth $9 billion in cash and “a significant minority stake” in the combined company, according to unnamed sources cited by Bloomberg.

eBay’s classified ad business competes with privately held Craigslist. eBay purchased a stake in Craigslist in 2004 and sold it back to the company in 2015. The auction site’s classified ad business raked in $1.06 billion in revenues last year, according to Statista. Craigslist’s annual revenues fell from around $1 billion in 2018 to an estimated $760 million in 2019.

Adevinta reported 2019 revenue of €740 million (about $847 million) from dozens of subsidiaries, including major firms in Spain, France and Brazil. Adevinta was spun out of Norway’s Schibsted last year. Schibsted retains a 59.3% stake in the company.

According to a Bloomberg report, other bidders for the eBay business included Prosus, a consortium of private equity firms led by Blackstone Group Inc. (NYSE: BX) and Hellman & Friedman.

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Prosus is the international division of South Africa-based Naspers, a media group that has invested widely in internet companies.

eBay has weathered challenges from private equity firms Elliott Management and Starboard Value over the past two years and recently named Jamie Iannone as its new CEO after Elliott and Starboard, which together own more than 5% of eBay’s shares, forced the ouster of Devin Wenig.

Starboard managing member Peter Feld said his firm was “excited” by Iannone’s appointment. Iannone, who came from Walmart where he was COO of that company’s commerce division, is expected to push for the changes that Elliott and Starboard are seeking. Those changes, not surprisingly, include selling noncore parts of the business and driving profits to the marketplace business.

Because eBay’s classified ad business has a more international focus, it has often be seen as a candidate for a sale.

eBay’s stock traded up about 0.4% on the report, at $58.35 in a 52-week range of $26.02 to $61.06. The consensus 12-month price target on the stock is $51.55. The company pays a dividend of $0.64 (yielding 1.10%).

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