Ebay announced this morning that it will acquire e-commerce and marketing solutions provider GSI Commerce in a cash and debt deal that will be worth about $2.4 billion. It would represent the online auction site’s priciest acquisition since its failed takeover of Skpe in 2005.
“The acquisition of GSI, which offers the most comprehensive integrated suite of online commerce and interactive marketing services available, will significantly strengthen our ability to connect buyers and sellers worldwide,” said John Donahoe, EBay CEO, in a statement.
On the surface, it seems to be a financial boom for GSI. EBay will be paying roughly $29.25 per share in the deal, which is about 51 percent higher than GSI’s most recent closing price. GSI stock hasn’t traded above the $29 mark since mid-July of 2010.
On the flip side however, EBay is getting a solid asset in return that could significantly strengthen its Marketplace offerings.
GSI, based in King of Prussia, Pa., is a market leader in e-commerce solutions and services for companies both retail and non-retail alike. Its’ primary business though is building e-commerce infrastructure, such as payment processing, fulfillment and customer service options, for retailers. The company, which boasts RadioShack, Dick’s Sporting Goods, Toys ‘R’ Us and Zales as some of its bigger clients, reported $1.36 billion in revenue last year, a 36 percent increase from 2009.
GSI shareholders will still need to approve the acquisition but it’s expected to be completed sometime in mid-2011.
EBay will not be absorbing all of GSI’s components, however. The sports merchandise licensing business that GSI runs in conjunction with the NBA, NHL, NASCAR and other major sports brands, as well as 70 percent of GSI’s ownership of ShopRunner and Rue La La, will be divested under the terms of the deal and sold to a new holding company headed up by GSI founder and CEO Michael Rubin.
EBay instead will focus on integrating GSI’s e-commerce services with its own Marketplace and PayPal offerings, a move that the company predicts could generate up to $60 million by 2013.
As always, we welcome your thoughts and comments!