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Ebay sells three small UK units to get $9.2bn deal approved

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Saleha Riaz
·2-min read
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Last month, the UK Competition and Markets Authority said Adevinta’s anticipated purchase of eBay Classified Group could lead to higher prices and less choice for consumers. Photo: Getty Images
Last month, the UK Competition and Markets Authority said Adevinta’s anticipated purchase of eBay Classified Group could lead to higher prices and less choice for consumers. Photo: Getty Images

Ebay (EBAY) and Norway's Adevinta (ADE.OL) said they will sell three British units so that they can get UK regulatory approval for a $9.2bn (£6.6bn) deal which has been on the cards since July 2020.

Last month, the UK Competition and Markets Authority (CMA) said Adevinta’s anticipated purchase of eBay Classified Group (ECG) could lead to higher prices and less choice for consumers.

It said both Adevinta and ECG operate online classified advertising platforms in the UK. These websites — Adevinta’s Shpock and ECG’s Gumtree — allow people to buy and sell a broad range of used or new goods.

Meanwhile, eBay’s marketplace is the largest platform for people to sell goods to one another in the UK.

The CMA explained that with the sale to Adevinta, eBay will acquire a 33.3% voting stake in Adevinta and positions on the Adevinta board which "means that eBay will be able to participate in the management of Adevinta and could enable it to influence the business strategy for both Gumtree and Shpock."

Under the deal, Adevinta will acquire ECG in return for $2.5bn in cash and 540 million shares, making the US firm Adevinta’s largest shareholder with a 44% stake and 33.3% of the vote.

READ MORE: UK competition regulator could stall eBay's £6.5bn sale of Gumtree

Adevinta has now said that “the remedies proposed by Adevinta and eBay are the divestment of each company's primary classifieds operations in the UK: Shpock, Gumtree (UK) and Motors.co.uk.”

On a combined basis, the UK businesses would have represented less than 5% of total consolidated revenue for the merged classified ads company.

The CMA said "there are reasonable grounds for believing that the undertakings offered by Adevinta and eBay, or a modified version of them, might be accepted by the CMA under the Enterprise Act 2002."

The regulator will decide whether to accept eBay and Adevinta’s proposal before the end of April.

“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," Joel Bamford, senior director of mergers at the CMA, told Financial Times.

Adevinta now aims to close the transaction in the second quarter of 2021, "subject to final ratification of the remedies execution plan by the CMA and receipt of outstanding regulatory approval in Austria."

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