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Yahoo giving up its Gmarket stake to eBay

Carol Ko | April 16, 2009
Selling its one-tenth share in South Korean e-commerce marketplace

HONG KONG, 16 APRIL 2009 Yahoo, the US-based online search engine, has agreed to sell its estimated 10 per cent share in Gmarket to eBay.

Gmarket is a retail e-commerce marketplace in South Korea, offering buyers a range of products at competitive prices and sellers a comprehensive and flexible sales solution.

This agreement forms part of eBay's announced tender offer for shares of Gmarket, a retail e-commerce marketplace in South Korea.

Yahoo announced it will continue to maintain its other operations in South Korea following the sale.

eBay's offer

eBay, the US-based online auctioneer, announced yesterday that it was commencing a tender offer to acquire all common shares and all American Depository Shares of Gmarket for a per share price of US$24 (31,767 Korean won), for a total purchase price of up to about US$1.2 billion.

Assuming all outstanding shares are tendered, eBay would become the world's sixth largest e-commerce market.

At closing, eBay will hold at least 67 per cent of Gmarket as a result of shares tendered pursuant to agreements to tender with members of management and other investors sufficient to satisfy the minimum tender condition. It will also hold new shares issued by Gmarket in connection with the combination of Gmarket and eBay's existing Korean marketplace business, Internet Auction Company (IAC).

IAC, founded in 1998 as an online auctioneer and acquired by eBay in 2001, has become one of South Korea's leading online markets with more than 21 million registered users. IAC offers products including computers, electronics and sporting goods to an online community of more than two million daily unique visitors.

Combining operations

Shareholders that have signed agreements to tender include Interpark Corporation and its chairman, Ki Hyung Lee, current holders of about 34 per cent of the outstanding shares of Gmarket. eBay will combine Gmarket's operations with IAC, while maintaining separate sites.

The combination of Gmarket and IAC establishes an exceptionally strong leadership position for eBay in one of the world's largest, most dynamic and innovative e-commerce markets, said John Donahoe, eBay's president and chief executive officer.

This deal creates strong operational synergies between the two market leaders, offers more opportunities for sellers and enhances our ability to serve complementary consumer segments, said Donahoe.

Young Bae Ku, Gmarket's president and chief executive officer, said the company welcomes eBay's investment.

Young said: This transaction will provide us an excellent opportunity for our next growth stage in South Korea and will also help accelerate our expansion strategies beyond the country. We look forward to teaming up with eBay's leadership both locally and globally to drive our future growth and expansion.

eBay markets, with more than 86 million active users, generated US$60 billion of gross merchandise volume worldwide in 2008 and revenue of US$5.6 billion. IAC generated US$2.2 billion of gross merchandise volume in 2008 and revenue of US$161.2 million. In 2008, Gmarket generated US$3.2 billion of gross merchandise volume and revenue of US$220.8 million.  


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