EBay to buy GSI Commerce
Online marketplace operator EBay has said that it will pay $2.4 billion for GSI Commerce, which operates websites for retailers like Toys R Us and Bath & Body Works. EBay Inc., which runs its namesake site where users buy and sell items through auctions and fixed-price "Buy it Now" formats as well as online payments service PayPal, hopes the acquisition will bolster its ability to connect buyers and sellers around the world. GSI runs websites, packs and ships products and offers interactive marketing services to a variety of retailers. It has long-term contracts with 180 retailers, including Radio Shack, Ace Hardware and American Eagle Outfitters. EBay has been working on improving its eBay.com website by doing things such as revamping its home page, cutting upfront listing fees it charges sellers and bolstering its search engine. In an interview, eBay CEO John Donahoe said the GSI deal fits in with his company's efforts to help retailers grow. Lots of businesses need help doing things like generating demand for products, running their websites, delivering goods to customers, and growing their mobile sales, Donahoe said. GSI does this for large companies, and eBay and PayPal do this for small- and medium-sized companies, he said, which makes the acquisition a natural fit. The purchase might also help eBay compete with Seattle-based Amazon, which, in addition to selling many items directly, allows merchants to sell their products through its site and offers product fulfillment services, too. EBay is already involved with GSI through PayPal, which was integrated with GSI customers' sites last year. San Jose-based eBay said it will pay $29.25 per share. The $2.4 billion total is the second-largest amount eBay has paid for another company so far. In 2005 eBay paid at least $2.6 billion for Internet calling and messaging service Skype, which it has since sold.
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