EBay Makes $2.4 Billion Bid for GSI Commerce, But Without RueLaLa
It looks like GSI Commerce (NASDAQ: GSIC), the parent company of Boston-based private sale website RueLaLa, is about to become part of eBay—but without RueLaLa attached. The San Jose, CA-based auction giant announced in a press release and conference call this morning that it has agreed to acquire King of Prussia, PA-based GSI for $29.25 per share, or $2.4 billion. That’s a 51 percent premium over the e-commerce infrastructure provider’s closing price on Friday.
But RueLaLa, which became part of GSI after the Pennsylvania-based company bought its parent company Retail Convergence in 2009, won’t be going along for the ride. EBay said in today’s announcement that RueLaLa and another GSI operation, ShopRunner, are “not core to its long-term growth strategy.” So those two sites, plus GSI’s licensed sports merchandise business, will be spun out in a separate company to be headed by GSI founder and CEO Michael Rubin. EBay will keep a 30 percent stake in RueLaLa and ShopRunner; it’s not clear yet what the spinout will be called or where it will be based.
There’s one thing that could hold up the whole deal: under the agreement, GSI is entitled to a 40-day “go shop” period during which it’s free to look for better acquisition offers. It no higher bid emerges by May 6, the eBay acquisition will move forward, with a closing expected by the third quarter of this year.
By combining GSI’s services with its existing eBay Marketplaces business and its PayPal payment infrastructure, eBay hopes to become a leading provider of online commerce services to other retailers. GSI’s e-commerce platform powers the Web storefronts of dozens of prominent companies, such as Adidas, Aeropostale, BabiesRUs, Hewlett-Packard, and iRobot. It also offers backend services such as interactive marketing, order management, payment processing, and fulfillment management. EBay president and CEO John Donahoe said in a statement that the acquisition of GSI would “significantly strengthen our ability to connect buyers and sellers worldwide.”
But eBay apparently doesn’t want to be in the e-retailing business itself—hence the divestiture of RueLaLa and ShopRunner. EBay will loan the new holding company $467 million, according to today’s announcement, while Rubin will personally invest another $31 million.