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SEOUL, March 12 (Korea Bizwire) — U.S. online shopping giant eBay is looking to unload its South Korean unit.
The e-commerce industry believes that there are a few large retail companies that could potentially buy eBay Korea in the South Korean market due to its large size.
According to industry sources, the deal as a whole could potentially be worth 5 trillion won (US$4.18 billion).
The estimated price set by eBay’s U.S. headquarters represents roughly one third of the company’s 16 trillion won in annual transactions.
eBay Korea is the country’s largest e-commerce company, with major online shopping malls such as Gmarket, Auction and G9 under its arm. Their share is estimated to account for around 12 percent of the local market.
The acquisition of eBay Korea, which is one of the few companies operating online channels that is profitable, could quickly make it one of the nation’s top players.
There are a few large retail companies that could afford such a large-scale acquisition, thus, large retail company like Lotte and Shinsegae have emerged as potential buyers.
In particular, Lotte, which has yet to start its e-commerce business in earnest, was mentioned as the most prominent suitor. However, the company reportedly decided not to acquire eBay Korea.
“When Lotte was considering acquiring TMON Inc. for 2 trillion won, it was said that negotiations broke down over the price,” an industry source said. “The valuation of eBay Korea at 5 trillion won is too much.”
“eBay has a structure that makes profits by acting as a bridge between consumers and sellers through online market brokerage,” said Nam Sung-hyun, a researcher at Hanwha Investment & Securities Co.
“However, eBay needed to invest in related infrastructure in the process of transforming the purchasing product group into food, but the company failed to implement it properly, losing its competitive edge,” Nam added.
D. M. Park (dmpark@koreabizwire.com)
