eBay Buys E-Commerce Giant GSI For $2.4bn

eBay on Monday announced it will buy Pennsylvania-based e-commerce giant GSI Commerce for $2.4 billion (£1.5bn), a move it said will allow the company to shift into working with major brands and retailers.

The move was seen as a way of helping eBay better compete with Amazon.com, whose marketplace services have been growing by 30 to 40 percent a year, while eBay’s own growth has stalled.

Big companies

Currently, eBay is focused on handling online sales by individuals and smaller businesses, while GSI fulfils a similar function for large companies, the company said.

“We see retailers of all sizes, merchants of all sizes, looking for partners that can help them grow their businesses,” said eBay chief executive John Donahoe in a conference call, according to the San Jose Mercury News.

Donahoe highlighted functions such as generating demand for products, running websites, delivering goods and expanding mobile sales.

GSI handles website and inventory for 180 retailers and brands, including Levi Strauss Toys R Us and General Nutrition Centres. It hosts websites from its own data centres, offers marketing services, and stores and ships inventory for its clients.

Donahoe noted that eBay and GSI don’t compete with each other, unlike Amazon, which sells its own products alongside those of third-party merchants.

In the past five years this policy has led to retailers such as Target, Borders, Toys R Us and Circuit City pulling their products from Amazon’s website.

Savings

eBay said it will pay $29.25 per share, a 51 percent premium on GSI’s closing share price on Friday. The deal is eBay’s second-largest acquisition to date, after its buyout of Skype for $2.6bn in 2005, a company it has since sold.

eBay said it hopes to complete the deal in the third quarter of this year and to see savings resulting from it of about $60m by 2013.