Photo: Asa Mathat | All Things Digital
eBay announced plans to acquire GSI Commerce, paying $29.25 per share, or $2.4 billion in total.It will finance the acquisition with cash and debt and hopes to close the deal in the third quarter.
The acquisition price is a 51% premium over where the stock closed last Friday.
GSI Commerce makes software and handles end-to-end fulfillment and customer service for traditional retailers using online sales.
So it powers the websites of Radio Shack, Dick’s Sporting goods, and others. It also runs e-commerce sites like Rue La La, the second biggest flash sales site after Gilt Groupe. And it runs all the back-end fulfillment and support (read: warehouses).
As part of its acquisition, eBay plans on spinning out Rue La La and GSI-owned ShopRunner into their own businesses. eBay will hold onto 30% of the holding company that runs those businesses. It will loan the holding company $467 million. GSI paid $350 million for Rue La La and another company called Smart Bargains in 2009.
eBay will also fully divest itself of GSI’s licensed sports merchandise business.
GSI founder and CEO Michael Rubin will run the new holding company.
In the release, eBay says it doesn’t believe the businesses it is selling are part of eBay’s core growth mission.
This acquisition is an admission by eBay that its web-only model just doesn’t cut it against Amazon’s end-to-end fulfillment and service model, at least when competing for third-party retailer business. In the 1990s, eBay touted its virtual model as superior to Amazon’s. Not anymore.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.