Ebay will sell its South Korean business to a local consortium for $ 3.1 billion, according to people with knowledge of the matter, while rivals are looking to increase the heat on SoftBank-backed Coupang in the fourth largest ecommerce market in the world.
The consortium, which consists of South Korea’s largest brick and mortar retailer E-Mart and internet group Naver, plans to buy an 80 percent stake in eBay Korea for Won3.5tn (3.1 billion dollars) with American society maintaining the rest, people draw.
The acquisition could help the consortium overcome rapid growth Coupang, which raised $ 4.6 billion in a first public offering in New York in March to become South Korea’s largest player in the highly competitive ecommerce market. The Japanese technology group SoftBank is a large investor in Coupang.
Ebay Korea was the third largest ecommerce company in the country with a market share of 13% last year, according to research group Euromonitor. Its three platforms – Gmarket, Auction and G9 – registered Won20tn in transactions last year, Meritz Securities data showed.
Euromonitor has forecast that South Korea’s e-commerce market will grow by 11 percent this year to $ 116 billion. But it’s a fragmented market of more than a dozen players, with Coupang and Naver controlling 19% and 14% of shares in terms of transaction volume, respectively.
South Korea is one of the largest and fastest growing e-commerce markets in the world, driven by its tech-savvy population, high-speed internet infrastructure and densely populated environment. Ecommerce accounted for 35.8 percent of the retail market last year, compared to 28.6 percent in 2019, Euromonitor data show.
E-Mart plans to finance the agreement with Won3tn of asset-backed loans with the rest paid out of its means, while Naver will contribute Won100bn, according to an industry official close to the situation.
“Despite the funding structure, E-Mart needs Naver to replace its weak online networks,” the official said.
Conglomerate Lotte Group and E-Mart were the latest bidders for eBay Korea. Both have struggled to recover with Coupang, which invests heavily in logistics to increase its delivery times. Coupang nearly doubled its revenue last year to $ 12 billion as more consumers moved into online shopping during the Covid-19 pandemic.
“Both Lotte and E-Mart were eager to take over eBay’s operations, but E-Mart offered about Won500bn more,” the industry official added.
Naver is one of Korea’s most popular internet portals and more than 40 percent of eBay customers in Korea access it via the former’s search engine.
Shinsegae, the parent company of E-Mart, and Naver collaborated in March exchanging stakes in each other worth Won250bn.
Ebay Korea declined to comment. E-Mart said in a regulatory document that it was in discussions with eBay but a sale had not been finalized. Naver said in a separate file that the agreement had not been concluded.