After inking a $9.2 billion deal to merge their classifieds businesses last year, eBay and Norway’s Adevinta have announced a deal to sell off three popular web properties in the U.K. to get the deal cleared by local regulators, the Competition Markets Authority. The companies plan to sell off Adevinta-owned Shpock, and eBay-owned Gumtree and Motors.co.uk — three U.K. sites that let individuals sell used goods and find/offer services — with the transactions expected to be completed in time for eBay and Adevinta to complete their bigger deal in Q2 2021, pending final regulatory approvals.
“EBay and Adevinta remain excited about the proposed combination of Adevinta and eBay Classifieds Group and now target closing the transaction in Q2 2021, subject to final ratification of the remedies execution plan by the CMA and receipt of outstanding regulatory approval in Austria,” the companies said in a joint statement.
The companies have not yet said whether they plan to sell them in a single package or to independent buyers, but a spokesperson for Adevinta said that it’s likely that the CMA will give another update in 2-4 weeks. She declined to give a price range for the properties. In eBay’s 2019 Annual report, it noted that it paid $93 million for Motors.co.uk. Gumtree was acquired way back in 2005 in a trio of purchases totaling just over $81 million. Schibsted acquired a majority stake in Shpock in 2005 and completed its purchase in 2019 for an undisclosed sum.
But in the statement from the companies, eBay said that Gumtree and Motors, which form its U.K. classifieds business, account for less than 10% of its consolidated classifieds revenues (which were just over $1 billion in 2019, its last available annual report); and Adevinta said that Shpock revenues make up less than 1% of its consolidated revenues (which were €740m figure for FY2019, or around $894 million). Adevinta is majority owned by Norwegian publisher Schibsted.
The CMA provisionally said in a brief update that it would support the deal if the sale of the three properties gets completed.
“Competition between different online platforms is important for people selling used items or searching for a bargain online, as it leads to them receiving better services and lower fees. The companies have offered the sale of two businesses which we believe may address the competition concerns our investigation raised. The CMA will now review these proposals carefully before making our final decision. This is one of an ongoing series of merger probes involving large digital mergers, where we are scrutinising deals to preserve competition and protect consumers’ interests.”
The CMA now has until 29 April 2021 to decide whether to accept the undertakings, with the possibility to extend this timeframe to 28 June 2021 if it considers there are special reasons for doing so, it said.
The divestment decision comes as a result of the CMA last month announcing that the deal raised competition concerns as is.
“It is important that people have choice when it comes to selling items they no longer require or searching for a bargain online, and that they can enjoy competitive fees and services,” said CMA’s Joel Bamford, Senior Director of Mergers, in a statement. “There is a realistic chance that without this deal Gumtree and Shpock would have been direct competitors to eBay, which is by far the biggest player in this market. This is the latest in a series of merger probes by the CMA involving large digital companies, where we are thoroughly examining deals to ensure that competition is not restricted, and consumers’ interests are protected.”
It also noted that only Facebook Marketplace remained a “significant competitor.”
“This could reduce consumer choice, increase fees or lower innovation in the supply of platforms that allow people to buy and sell goods online.”
Interestingly, one of those other deals also involves eBay, indirectly. Another asset that eBay sold off as part of its wider divestment efforts aiming to streamline its business was selling secondary ticket market company StubHub to Viagogo in a $4 billion deal. That acquisition closed last year, but then the merger was investigated by the CMA, which last month ordered Viagogo to divest the company’s business outside of North America. It’s a crushing blow when you consider that events have fallen off a virtual cliff (literally and figuratively).
Turning back to Gumtree, Shpock and Motors.co.uk, even if those sites are a relatively small part of eBay and Adevinta’s wider business revenue-wise, collectively they form a very popular option for people looking to buy or sell used goods or hire people for service jobs in the U.K. I’ve been a regular user of both in my time, to sell and buy items, and to advertise for/discover several excellent au pairs. Coincidentally, people also use them to resell tickets.
It will be worth watching to see how and if that changes though. With deals like last week’s $191 million fundraise for Wallapop, and Facebook’s persistent Marketplace efforts, it is clear that there is still business to be found in classified listings, both as a standalone enterprise or as something that creates stickiness for users to hang around for other services and advertising alongside them.
Updated with further sales numbers for the companies, and an updated statement from the CMA.
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