eBay isn’t just cutting costs. It is also spending cash — more than $1 billion worth.
It is spending $945 million ($820 million cash, $120 M worth of employee options) on PayPal alternative Bill Me Later. And it is spending $390 million on Danish auction sites Bla Avis and BilBasen. One short-term winner in the Bill Me Later deal: Amazon, which bought an undisclosed stake in the company last December.
Financials on Bill Me Later:
eBay will acquire all of the outstanding shares of capital stock and warrants to purchase capital stock of privately-held Bill Me Later for approximately $820 million. In addition, at closing eBay will assume all outstanding Bill Me Later employee options which have a current value of approximately $125 million, net of option exercise proceeds. eBay plans to finance the acquisition and receivables with a combination of cash and available financing resources including eBay’s existing line of credit. The acquisition is subject to various customary closing conditions and is expected to close in the fourth quarter of 2008.
eBay anticipates that Bill Me Later will generate an estimated $150 million in revenue in 2009. For the fourth quarter of 2008, eBay expects the acquisition to be dilutive to non-GAAP and GAAP earnings per share by $0.03 and $0.05, respectively. For the full year 2009, eBay expects the transaction to be dilutive to non-GAAP and GAAP earnings per share by $0.06 and $0.13, respectively. eBay expects the deal to be accretive in 2011. For more information on how non-GAAP financial measures are calculated, please refer to eBay’s second quarter earnings release issued on July 16, 2008.
Bill Me Later press release:
eBay Inc. (NASDAQ:EBAY – News) today announced that it has reached a definitive agreement to acquire Bill Me Later®, the number two online-oriented payments brand, for approximately $820 million in cash and approximately $125 million worth of outstanding options, net of option exercise proceeds. The acquisition extends the company’s leadership in payments by combining Bill Me Later with eBay’s PayPal, the number one online-oriented payments brand. Subject to various closing conditions, the deal is expected to be completed by year-end.
“Bill Me Later is a perfect complement to our portfolio; PayPal and Bill Me Later belong together,” said John Donahoe, eBay Inc.’s president and chief executive officer. “We now have a powerful combination of the two leading, complementary online payment products, each with proven benefits for consumers and online merchants. At an attractive valuation, our investment in Bill Me Later opens significant long-term growth opportunities.”
The deal offers strong synergies within the eBay portfolio. Bill Me Later can offer its deferred payments and promotional financing service to the tens of millions of customers who use eBay and PayPal. PayPal expands its customer base to approximately 1,000 of the most popular Web sites and to the millions of online shoppers who use Bill Me Later.
Danish site press release:
eBay Inc. (Nasdaq:EBAY – News) today announced it has acquired Den Bla Avis and BilBasen, providers of leading online classifieds sites in Denmark for a purchase price of approximately $390 million (approximately 2.1 billion Danish Kroner). The addition of Den Bla Avis (dba.dk) and BilBasen (bilbasen.dk) to eBay’s global classifieds portfolio positions the company as a leader in the online classifieds market in Denmark and further strengthens the company’s world-leading portfolio of online classifieds sites that already includes Marktplaats, Kijiji, LoQUo, Gumtree and mobile.de. eBay’s online classifieds business now has a presence in more than 20 countries and 1,000 cities.
“Classifieds are the preferred e-commerce format in Denmark and represent an attractive and growing market,” said Jacob Aqraou, general manager, eBay global classifieds business unit. “With more than 25 years of classifieds success in Denmark, Den Bla Avis and BilBasen are household names with Danish consumers and we’re very excited to welcome them and all of their employees to the eBay global classifieds portfolio.”