EBay is inking a deal with Norway’s Adevinta to sell its classified business for $9.2 billion.
The deal will create the world’s largest online classified ads platform with a presence in 20 countries. It is estimated to reach a billion people and yield nearly three billion monthly visits. As part of the deal, eBay will receive $2.5 billion in cash and will acquire a 44 percent majority stake in Adevinta along with a third of voting rights.
“We believe the combination of the two companies, with their complementary businesses, creates one of the most exciting and compelling equity stories in the online classifieds sector,” said Rolv Erik Ryssdal, CEO of Adevinta, in a statement.
EBay’s classified business constitutes Gumtree in Australia and the United Kingdom, Kijii in Canada, Marktplaats in the Netherlands, Mobile.de in Germany and Vivanuncios in Mexico. Meanwhile, Adevinta owns Leboncoin.fr, France’s most prominent online classifieds site, and more than a dozen classified sites serving other countries in Europe, Latin America and North Africa.
The two companies expect the acquisition to generate about $185 million in annual revenues within three years.
Ebay’s sale of its classified business comes in response to growing pressure from investors in recent years to spin off its non-core businesses and focus more on its marketplace business. In March 2019, eBay announced that it was initiating a strategic review of its classifieds and its ticketing business after facing mounting pressure from activist investor Elliot Management, a hedge fund that owned a 4 percent stake in the company, as well as Starboard Value. In November, the company sold off its ticketing business StubHub to Viagogo in a $4 billion deal.
The sales of the two non-core businesses has generated an impressive financial windfall totaling at nearly $13.3 billion. It remains to be seen whether eBay will reinvest this money in acquiring other platforms or if it will use it to overhaul its core marketplace business, which has significantly lost market share to Amazon in recent years.
The sale of its classified business is still subject to regulatory approval and is expected to close in Q1 2021.