EBay Enterprise is to be acquired for $925 million by a consortium led by Permira Funds and Sterling Partners.
EBay Enterprise is the commerce solutions arm of eBay Inc., the online marketplace. It consists of four divisions: Magento Commerce Technologies, eBay Marketing Solutions, Enterprise Services and Operations. The deal is the latest spin-off of part of the overall eBay group and comes a day before eBay is set to split from PayPal, its payments arm. Sterling Partners, Longview Asset Management and Innotrac Corp. comprises the consortium buying eBay Enterprise, along with companies owned by Permira Funds. The transaction is expected to close before the end of this year.
Word of the acquisition came on the same day eBay posted second-quarter results. The company posted net income of $83 million, or 7 cents a diluted share, from net income of $676 million, or 54 cents, a year ago. Excluding eBay Enterprise, now presented as a discontinued operation, net income for continuing operations fell 5.3 percent to $682 million, or 56 cents a diluted share, from $720 million, or 57 cents, a year ago. Net revenues rose 6.7 percent to $4.4 billion from $4.1 billion. Continuing operations on a non-Generally Accepted Accounting Principles Basis saw net income at $931 million, or 76 cents a diluted share. While earnings per share beat Wall Street’s consensus of 73 cents, revenues were below analysts’ expectation of $4.49 billion.
By business unit, PayPal posted a 16.1 percent increase in net revenue to $2.26 billion from $1.95 billion. Net total payment volume for the quarter rose 19.8 percent to $65.9 billion from $55.05 billion. EBay’s marketplace business saw a 2.7 percent slip in net revenues to $2.12 billion from $2.17 billion a year ago. Gross merchandise volume for the quarter slipped 2.1 percent to $20.06 billion from $20.49 billion.
Shares of eBay rose 3.4 percent in Nasdaq trading to close at $65.59.
EBay said the discontinued operation of eBay Enterprise posted a $599 million loss, net of income taxes, for the quarter, compared with a $44 million loss a year ago. It also posted $300 million in revenue for the quarter.
The quarterly report is the final consolidated earnings report for the two business units. Following the split on Friday of eBay’s marketplace business from PayPal, its payments arm, the two firms will begin trading as two separate and independent public companies on Monday.
Activist investors, including Carl Icahn, had pushed for eBay to split itself into two companies. Although eBay initially resisted, it ultimately bowed to the pressure.
John J. Donahoe, president and chief executive officer, said in a conference call to Wall Street analysts that since the decision to separate last September, the company has worked on setting “each business up for long-term success.” Further, there are operating agreements in place to preserve certain synergies between the two firms.
Beginning on Monday, Devin Wenig, the current marketplaces president, will become ceo of eBay. Dan Schulman will become the ceo at PayPal.