eBay Inc. is selling its ticket marketplace, StubHub to European rival Viagogo. The deal is worth US$4.05 billion in cash. This allows the company to address pressure from shareholder activists and on its main retail site.
eBay’s shares (EBAY:UN) rose by (1.40%) percent to US$35.61 at 10:24 am today. They are up about 25 percent this year, giving the San Jose, California-based company a market value of about US$28 billion.
Starboard Value and Elliott Management Corp., run by billionaire Paul Singer, this year proposed a plan to improve eBay’s performance. This includes a sale of StubHub and the classifieds business.
Pressure from the board led to Devin Wenig’s departure as eBay chief executive officer in September. Wenig failed to grow the marketplace platform and clashed with the board about not wanting to sell the classifieds business, it was reported at the time.
Wenig took over eBay after its split with PayPal in 2015 and made audacious promises of returning the marketplace to prominence. To compete against Amazon.com Inc., Wenig attempted improving eBay’s image with younger shoppers, made the site easier to navigate. Also making harnessed artificial intelligence to give eBay merchants real-time insights about what shoppers want and how much they’re willing to pay.
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eBay also continues to watch Amazon grow at a much faster pace and amassing market share and customers.
eBay purchased StubHub in 2007 for US$310 million as it sought to increase its online share for secondary sales of seats to concerts and sporting events. The unit makes up about 11 percent of eBay’s total revenue in the third quarter.
Win-Win for Fans
Eric Baker, Viagogo’s founder and chief executive officer, co-founded StubHub while in business school. “It has long been my wish to unite the two companies,” he said. “I am so proud of how StubHub has grown over the years and excited about the possibilities for our shared future.” He further claims the merger “creates a win-win for fans.”
Combined, the companies will sell hundreds of thousands of tickets daily across more than 70 countries, according to the statement.
Viagogo made changes to its business after criticism from U.K.’s Competition and Markets Authority for misleading customers. The CMA suspended court proceedings in September, saying the ticket re-seller addressed concerns.
The deal is expected to close by the end of the first quarter of 2020, the companies said.
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