eBay, which competes with other e-commerce sites like Amazon, Wal-Mart, Overstock, and Blue Nile, recently decided to acquire GSI Commerce for $2.4 billion. We believe that this acquisition will make eBay’s marketplace more attractive for merchants of all sizes and add significant value to the company’s stock.
We have a price estimate of $32.81 for eBay stock, implying a roughly 5% premium to market price.
Possible Synergies for eBay
This acquisition will allow eBay to compete more effectively with online retailers such as Amazon by enabling more merchants of all sizes to conduct e-commerce. The new platform will attract buyers who prefer the simplicity of buying at fixed prices and merchants who prefer selling at fixed prices. GSI Commerce will bring order-management, fulfillment, and shipping business to eBay (including packing up orders for shipment). The deal will also put eBay in better position to help merchants of all sizes to better leverage mobile and social commerce for growth.
eBay and GSI aim to move towards a common platform after 2011 to serve retailers of all sizes across eBay, Paypal and GSI. eBay anticipates that the acquisition could add to its bottom-line from 2012 onwards, even though it may put negative pressure on operating profits in the near-term.
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