EBay, the on-line auction site, announced yesterday that it will
acquire internet payment provider PayPal. EBay agreed to pay $1.4
billion for the company, which is the most popular means of payment
for the millions of users of eBay’s auction web site.
US-based eBay said it will acquire all PayPal shares in a
tax-free, stock-for-stock transaction using a fixed exchanged ratio
of 0.39 eBay shares for each PayPal share. This is translated to an
offer of $21.93 for each of the 64 million PayPal shares
outstanding.
However, the final purchase price may vary significantly from
the estimates, and will depend on a number of factors, including
the length of time necessary to close the transaction, and the
value of eBay stock at closing.
The acquisition is subject to various stockholder, government
and regulatory approvals and is expected to close at the end of
2002. EBay CEO Meg Whitman, said: “eBay and PayPal have
complementary missions. We both empower people to buy and sell
on-line. Together we can improve the user experience and make
on-line trading more compelling.”
PayPal which will continue to operate as an independent brand,
conducts approximately 60% of its business activities on the eBay
web site. It will also continue to provide its Web Accept product,
which enables independent on-line merchants to accept payment
directly at their web sites.
However eBay plans to stop PayPal’s services for gaming
operators, in view of the “uncertain regulatory environment.”
