What's going on?
According to recent reports, eBay’s classifieds business is about to be going once, going twice, aaaand sold for almost $9 billion.
What does this mean?
eBay is most famous for its auction-based marketplace, but it was also once home to PayPal and ticket resale platform StubHub (tweet this). After “spinning off” the former in 2015, the company came under pressure from “activist investors” to sell off more of its other businesses – which led the company to ditch the latter last year.
eBay’s “global classifieds” business – think sites like Craigslist and Gumtree – is next to face the chop. And Europe’s Adevinta – itself an amalgamation of several classifieds businesses – is looking like the most likely buyer, having fended off rival bids from private equity firms and public internet conglomerate Prosus. eBay reportedly wants to keep a small stake in the company after selling the majority, and Adevinta’s flexibility seems to have won the day.
Why should I care?
For markets: Classifieds information.
With so few ongoing costs, classifieds businesses can have sky-high profit margins – but activist investors seemed to think eBay would be better off without. They argued eBay’s various segments made the company too complex, and that this was reflected in a share price that should’ve been higher than it was. They’re hoping that – besides bringing in some cash – selling off the classifieds business will make the rest of eBay simpler to assess. That should, in turn, attract more investors, push the share price up, and benefit existing investors – including the activists themselves.
Zooming out: Deals a-flying.
Oil giant Chevron announced a deal of its own on Monday: the $5 billion acquisition of Noble Energy. After getting outbid in its $50 billion pursuit of Anadarko Petroleum, the deal should help Chevron double down on its efforts in the US Permian Basin – a region popular among oil companies because it’s one of the cheapest places in the US to produce the inky delight.