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EBay is selling off its eBay Enterprise business one day before it spits with PayPal.
A consortium led by private equity firms Sterling Partners and Permira Funds on Thursday said it would buy eBay Enterprise from eBay for $925 million. eBay Enterprise helps run online retail sites, including those of Ikea, Timberland, and iRobot. The deal is expected to close in the second half of the year.
The deal lets eBay further narrow its focus on its core business as it prepares to separate from PayPal on Friday, according to CNET. Last month, eBay also sold back a stake in Craigslist and agreed to end litigation with the online classifieds company.
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Back in January, eBay said it would either sell eBay Enterprise or spin it off in an IPO. As early as four years ago, the company invested $2.7 billion in the Enterprise business with the purchase of GSI Commerce.
“Devin Wenig, eBay’s incoming CEO, took a positive stance on eBay’s future but was blunt about its challenges going forward, addressing eBay’s need to bring back infrequent customers and make its site easier to search,” CNET wrote.
“I’m encouraged by the state of our business,” Wenig said on a conference call with analysts. “We’ve made solid progress but we have significant work ahead of us.” He also said eBay’s leadership will “make hard decisions along the way.”
eBay on Thursday also released second-quarter net earnings of $83 million, or seven cents a share, down from $676 million, or 53 cents a share, a year earlier. Excluding losses from discontinued operations, which includes eBay Enterprise, adjusted earnings were 76 cents a share, up from 70 cents a share. Revenue was $4.4 billion. Analysts polled by Thomson Reuters expected adjusted earnings of 72 cents a share and revenue of $4.49 billion.
The payments unit, which includes PayPal, posted a 16% increase in revenue year over year to $2.26 billion. After Friday’s split, PayPal is expected to become the larger company by market valuation, following huge growth since its $1.5 billion acquisition by eBay in 2002, according to CNET.
But PayPal will also face the big challenge of increased competition in its field, as Apple and Google move into its niche. “We want to become more of a part of how customers move money,” PayPal’s incoming CEO Dan Schulman said on a call with analysts Thursday.
Separately, eBay said that its board of directors agreed to boost its stock buyback by $1 billion, adding to $2 billion already authorized.
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