eBay seeks stake in South Korean online retailer Gmarket

14 August 2008

Online auctioneer eBay yesterday announced that it was acquiring a minority 37-per cent stake in Gmarket Inc, lifting shares of the South Korean online retailer by as much as 16 per cent. Some analysts saw the move as the first step toward eBay taking over Gmarket and removing it as a competitor in South Korea, where the two companies battle for market share.

eBay is in discussions with Interpark Corp, a South Korean web-based mall operator, and its chairman, Ki Hyung Lee, to buy out their interests. Interpark, the largest shareholder in Gmarket, directly held a 29.3-per cent stake of that company and Lee directly held 7.3 per cent as of December 2007, according to Gmarket's most recent annual report filed on 13 June. Yahoo is also a shareholder in the Korean entity with a 10 per cent stake.

eBay shares were down 18 cents, or less than 1 per cent, in afternoon trade at $25.86 after being down more than 1 per cent earlier in the trading day. Gmarket shares rose $3.20, or 14.4 per cent, to $25.38 on NASDAQ.

A purchase would mark eBay's latest move to capture the online auction market outside the US. The company says more than half of its revenue already comes from abroad eBay already runs Korean online auction site Internet Auction.

eBay's other international auction forays include its ownership of a stake in Buenos Aires, Argentina-based MercadoLibre Inc. and re-entrance to the Japanese market with Yahoo Japan Corp., Yahoo's joint venture with Softbank Corp. In India it had taken over bazee.com and renamed it as eBay.in.

The companies are seeking approval from the Korea Fair Trade Commission, eBay spokesman Jose Mallabo said. "There can be no assurance that the KFTC will approve the possible transaction, that an agreement will be reached or that a transaction will occur," he said in a statement.