It has just been announced by eBay that it is all set to buy GSI Commerce which is a provider of services such as ecommerce and interactive marketing. The deal has been agreed at the price of each share at $29.25 which makes the total cost around $2.4 billion. eBay will finance the acquisition with both debt and cash. GSI boasts of long term commerce services with a number of brands and retailers and in excess of 180 customers across 14 categories of merchandise. According to the expectations of eBay, the clients of GSI will benefit from eBay’s Marketplaces and particularly the PayPal service.
eBay sealed the deal with an offer of 51 percent premium over the closing price of GSI on the 25th of March. However, as is usual with such transactions, this deal will only go through after being approved by the regulatory bodies along with many other closing conditions that are customary. The terms of the agreement of the merger allow GSI Commerce to solicit proposals for acquisition from third parties for a 40 day period called the “go-shop” period which will continue through the 6th of March 2011. However, according to the agreement, eBay is also provided the customary rights which allow it to match any possible superior offer.
A part of the transaction compels eBay to divest businesses which according to the company do not play a core part in its long term strategy. The total of GSI’s business of licensed sports merchandise and also 70 percent of ShopRunner and Rue La La are included in the divestiture. These assets are going to be sold off to a newly formed holding company, led by the founder and CEO of GSI, Michael Rubin. The said company will be loaned a totality of $467 million by eBay.
