South Korean retailer Shinsegae Group’s E-Mart has confirmed wide-reported plans to acquire an 80-per-cent stake in EBay’s South Korean business for 3.4 trillion won (US$3 billion).
With the deal, traditional retail giant Shinsegae gets a much-needed boost in the Korean e-commerce sector, where it has lagged after competitors such as No. 1 Coupang, while EBay Korea gains a powerful backer after years of underperforming, analysts said.
EBay will retain a 20-per-cent interest in the Korean business, whose implied value is approximately $3.8 billion, EBay said in a statement.
The transaction is expected to close by year-end or early next year, subject to regulatory approvals.
Naver Corp, which had teamed up with E-Mart in the bidding process for EBay’s South Korean business, said earlier this week it had pulled out of the acquisition.
EBay Korea, which was the leading e-commerce player in South Korea until 2015, saw transaction growth slow starting in 2016 due to intensified competition from the likes of Coupang, analysts said.
Although the growth rate of South Korea’s online shopping market reached 41 per cent between 2018 and 2020, the estimated growth rate of EBay Korea’s transactions was about 4 per cent, Samsung Securities analysts wrote in a report last week.
However, the business was still attractive to traditional retail giants including Shinsegae’s E-Mart, South Korea’s largest hypermarket chain, which have struggled to build a leading presence in online shopping, especially after the onset of Covid-19.
“The deal price is lower than what EBay Inc originally wanted,” said Park Eun-kyung, analyst at Samsung Securities.
“But whether the price is competitive or not is expected to be judged in the short-term by improvement in EBay Korea’s performance, as EBay Korea’s recent efforts at direct-sourcing and rapid shipping can be helped by E-Mart’s buying power and cost control,” she said.
EBay Korea operates the e-commerce platforms Gmarket, Auction and G9, and is the country’s third-largest e-commerce firm with a market share of about 12.8 per cent in 2020, according to Euromonitor.
- Reporting by Heekyong Yang and Joyce Lee; editing by Jason Neelyand Kim Coghill, of Reuters.