EBay Shares Jump on Report of $30B ICE Offer

Analysts questioned the rationale for a deal, noting that ICE focuses on financial transactions while eBay is consumer-oriented.
Matthew HellerFebruary 5, 2020

EBay shares got a bump on reports that the owner of the New York Stock Exchange had offered to buy the struggling online marketplace though some analysts questioned the rationale for a deal.

Intercontinental Exchange said eBay had not “engaged in a meaningful way” and the companies were not in negotiations “regarding the sale of all or part of eBay.”

But in trading Wednesday, eBay’s stock held onto the gains it made the previous day after The Wall Street Journal reported ICE had made an offer that could value the company at more than $30 billion.
The fact that eBay shares were “still holding above a $30 billion market cap indicates that investors are waiting on the next shoe to drop, and for an offer to emerge,” PYMNTS said.

According to the WSJ, ICE “may see an opening to apply its technological expertise connecting buyers and sellers to eBay’s core e-commerce site, covering everything from electronics to collectibles.” The company has been a prolific acquirer, buying exchanges and clearinghouses in more than a dozen deals, including the 2012 purchase of NYSE Euronext.

But Barron’s said the rationale behind the potential acquisition was not immediately clear, noting that ICE focuses on financial transactions whereas eBay is an auction site that peddles clothing, memorabilia, electronics, and other wares.

ICE shares dropped 8.7% in trading Tuesday. “There is concern among some investors about a potential ICE for eBay transaction,” Christopher Harris, senior analyst at Wells Fargo, said in a client note.

EBay, a pioneer in e-commerce but has struggled to keep up with competitors such as Amazon and Etsy and has been under pressure from activist hedge funds Elliott Management and Starboard Value, which have urged it to consider selling both its classified-ads business.

“We believe Classifieds must be separated, and a more comprehensive and aggressive operating plan must be put in place to drive profitable growth in the core marketplace business,” Starboard said Tuesday in a letter to eBay management.

Reuters said there were “few benefits” to a combination between eBay and ICE and the “chilly reception [from ICE investors] may cool merger fever before it gets going.”