eBay forced to sell UK subsidiary after $9.2 billion deal halted

eBay forced to sell UK subsidiary after $9.2 billion deal halted

eBay's plans to sell its classifieds group to Adevinta were put on hold last month after UK regulators blocked its plan. The two companies agreed this week to sell three of its UK units - Shpock, Gumtree (UK) and Motors.co.uk - in order to gain regulatory approval.

 

Earlier, the UK competition regulator expressed concerns about Adevinta's planned $9.2 billion acquisition of US e-commerce group eBay's classifieds business, sending the Norwegian company's shares down 4.3%. The UK Competition and Markets Authority (CMA) said in a statement: "The CMA is concerned that the merger may result in a loss of competition between Shpock, Gumtree and eBay's marketplaces, with only Facebook Marketplace remaining the main competitor."

 

The CMA pointed out that by selling its classified advertising business, eBay will acquire 33.3% of Adevinta's voting rights and a position on Adevinta's board of directors , "which may reduce consumer choice, increase fees or reduce innovation in platform supply, allowing people to buy and sell goods online." In their view, Adevinta's acquisition of eBay's classified advertising group will occupy a dominant position in the market and eventually lead to a monopoly.

 

eBay responded that eBay and Adevinta disagree with the CMA's statement, but they will work constructively with the CMA and are confident that they will find a suitable solution to address the CMA's concerns. This week, eBay and Adevinta jointly proposed selling their three divisions in the UK to allay the CMA's concerns.

 

In addition, eBay said it "remains excited about the proposed merger of Adevinta and eBay Classifieds Group." It also said that in 2019, eBay Classifieds Group's UK business accounted for less than 10% of its consolidated revenue, while Adevinta's UK business accounted for 1% of its consolidated revenue. Combined, the UK will account for less than 5% of total consolidated revenue.

 

The companies currently expect the transaction to close in the second quarter of 2021 (April to June), subject to final approval of the remedial implementation plan by the UK Competition and Markets Authority (CMA) and approval from Austrian regulators.

 

eBay announced the deal with Adevinta in July for about $9.2 billion, saying at the time that the combined group would have a strong presence in 20 markets, reach 1 billion users and generate 3 billion monthly visits.


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