As part of the transaction, eBay will receive $2.5B in cash and approximately 540M Adevinta shares – representing 44% ownership of the pro forma company and a ~33.3% voting stake – and making it the biggest shareholder of Adevinta.
The deal is expected to close by Q1 of 2021 and is forecast to create estimated annual synergies of $150M-185M within the next three years.
Adevinta is majority owned by Schibsted (OTCPK:SBSNF), which has agreed to vote in favor of the transaction and will acquire eBay Classifieds’ Danish entity.
The deal is the culmination of a process that began in March 2019 when the company agreed to a review of its classifieds business and StubHub, as activist hedge funds Elliott Management and Starboard Value pushed for a focus on eBay’s core business to improve profitability.
eBay completed its sale of online ticket broker StubHub to Viagogo for $4B in February, but it has been flagged by U.K. regulators for further review.
eBay wanted to keep a stake in its online classifieds business, which includes Gumtree in the U.K. and Kijiji in Canada, putting Adevinta in pole position for the deal. Rival bidder Prosus was reportedly reluctant to to agree to a minority stake.
EBAY +2.5% premarket.
Shares are “getting multiple boosts from transitioning the business to support small businesses and the surge in online sales from COVID-19,” Stone Fox Capital wrote on Seeking Alpha.