EBay to sell online ticket seller StubHub for more than US$4 billion

Click to play video: 'EBay announces multi-billion dollar sale of StubHub' EBay announces multi-billion dollar sale of StubHub
WATCH: EBay announces multi-billion sale of StubHub – Nov 25, 2019

EBay Inc will sell ticketing unit StubHub to ticket reseller Viagogo Ltd for US$4.05 billion (or almost CAD$5.4 billion) in cash, the companies said on Monday, nearly a year after the e-commerce major came under pressure from activist investors to hive off some of its businesses.

In January, activist investors Elliott Management Corp and Starboard Value had urged eBay to sell its ticket sales business and eBay Classifieds Group as part of a plan that could double the company’s value.

READ MORE: Pitfalls to watch for when selling season tickets: ‘Don’t get greedy’

Elliott valued StubHub between US$3.5 billion and US$4.5 billion, while eBay Classifieds between US$8 billion and US$12 billion.

Viagogo Chief Executive Officer Eric Baker had co-founded StubHub but left before the business was sold to eBay for US$310 million in 2007.

Story continues below advertisement

Following the activist investors’ request, eBay made changes to its board of directors in March. It announced a review of its StubHub and eBay Classifieds businesses as part of an agreement with activist investors to avert a proxy contest.

Click to play video: 'Small businesses in GTA victimized by unscrupulous buyers' Small businesses in GTA victimized by unscrupulous buyers
Small businesses in GTA victimized by unscrupulous buyers – Nov 19, 2019

Elliott Management declined to comment on the development on Monday, while Starboard Value did not immediately respond to Reuters’ request for a comment.

The online seller had been a target of activist investors before. In 2014, Carl Icahn asked eBay to spin off its payments unit PayPal, a move which the company followed through in 2015.

The deal, which is expected to close by the end of the first quarter of 2020, comes after the exit of former CEO Devin Wenig in September, following his differences with the company’s revamped board.

The e-commerce company is expected to provide an update on its classified ad business next year.

Story continues below advertisement

READ MORE: Kijiji Canada cuts ticket sales option, cites challenges of shift to digital

Last month, eBay forecast its holiday quarter revenue below estimates, as it faces intense competition from and Walmart Inc.

“The core business remains challenged and these developments won’t directly impact it this quarter,” Wedbush analyst Ygal Arounian said on the divestiture impacting eBay‘s holiday quarter.

Shares of eBay were up as much as 3.7 per cent at US$36.43 in early trade on Monday.

Goldman Sachs & Co LLC acted as financial adviser to EBay, while Wachtell, Lipton, Rosen & Katz and Quinn Emanuel acted as legal advisers, according to the joint statement by the companies.

J.P. Morgan is acting as financial adviser to Viagogo, while Skadden, Arps, Slate, Meagher & Flom LLP and Kirkland & Ellis LLP are its legal advisers.

Click to play video: 'Critically acclaimed musical Hamilton tickets on sale for Toronto run' Critically acclaimed musical Hamilton tickets on sale for Toronto run
Critically acclaimed musical Hamilton tickets on sale for Toronto run – Oct 28, 2019

Sponsored content