EBay Selling Majority Stake in Korean Business for $3B

eBay (EBAY) is offloading a majority stake in its Korean business to Emart. The e-commerce giant has reached an agreement to sell an 80.01% stake in G-9, G-Market, and IAC. The company is to retain a 19.9% stake in the businesses valued at about $0.8 billion.

eBay is to receive $3 billion from the sale. The transaction should close by year-end or early next year, subject to regulatory approvals. One of the requirements includes the Bank of Korea approving fillings related to foreign exchange transactions.

Last year alone, the Korean businesses contributed over $14 billion in gross merchandise volume (GMV). The units also generated $1.4 billion in revenues with mid to high single-digit operating margins. (See eBay stock chart on TipRanks)

The merger between eBay Korea and the Emart group will result in a force to be reckoned with in the country’s e-commerce sector.

eBay CEO Jamie Iannone stated, “This deal brings together two strong e-commerce and retail companies that can unlock tremendous potential in Korea and provide more choice for customers. We believe this move further optimizes our portfolio and creates value for eBay shareholders.”

The deal should result in a wholesome ecosystem offering customers products that range from groceries to general merchandise. Emart has already confirmed plans to invest more than 1 trillion KRW in bolstering its fulfillment centers as it looks to enhance its same-day delivery option.

Following the Korea business sale, Stifel analyst Scott W. Devitt has reiterated a Buy rating on the stock and raised the price target to $78 from $75, implying 17.17% upside potential to current levels.

Devitt stated, “We view the transaction favorably and estimate the after-tax value of the deal implies an approximate $1.4B premium relative to the value of the Korean Businesses within our DCF analysis.”

Consensus among analysts is a Moderate Buy based on 8 Buys and 10 Holds. The average eBay analyst price target of $70.63 implies 6.10% upside potential to current levels.

eBay scores a 5 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.

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