EBay sells enterprise unit ahead of PayPal split
Published 17/07/2015 | 07:43
E-commerce company eBay said it was selling its enterprise business to a consortium led by private equity firm Permira for $925m, as it streamlines its operations ahead of the separation from payments business PayPal Holdings.
The company also reported a better-than-expected quarterly profit and boosted its share buyback plan by $1bn.
The deal leaves eBay with its slow-growing marketplace business, which faces stiff competition from rivals like Amazon.
Analysts, however, were bullish on eBay's prospects as a standalone company.
"Ebay will not grow nearly as fast as PayPal but it is a very profitable business that generates tremendous amount of cash - some of which they will be able to return to shareholders," Wedbush Securities analyst Gil Luria told Reuters.
EBay's enterprise business, the company's smallest, was formerly known as GSI Commerce. The business, which eBay purchased in 2011 for $2.4bn, helps retailers strengthen their online presence and e-commerce capabilities.
The business has since lost customers and seen sluggish growth in the past few years as retailers increasingly move their online operations in-house.
The unit suffered a blow this month when Toys R Us, one of its largest customers, ended a near decade-long contract to launch its own online platform.
The Permira-led consortium of buyers includes Sterling Partners, Longview Asset Management, Innotrac and companies owned by Permira funds.
The sale was announced alongside eBay's second-quarter results, where it reported a 7pc jump in net revenue, to $4.38bn.
Sales were driven by higher demand in the PayPal business it plans to spin off on Friday.
PayPal is slated to begin trading separately on the Nasdaq on July 20, creating a new company that some analysts say will be worth $40bn.