eBay Korea Demanding 5 Trillion Won... New Variable in Final Acquisition Battle as 'SKT Withdraws'

Today's Main Bidding: Lotte Shopping, E-Mart, MBK Partners Eye Acquisition
SKT Bows Out Due to Acquisition Burden... Concerns Over 'Winner's Curse'

[Image source=Yonhap News]

[Asia Economy Reporter Jo In-kyung] As the final bidding for the sale of eBay Korea to find a new owner takes place on the 7th, attention is focused on whether the outcome of this sale will become a turning point that shakes up the domestic e-commerce market landscape, or if there will be last-minute negotiations over the high valuation of the sale price.

According to the distribution industry on the 7th, the bidders expected to participate include the initially shortlisted acquisition candidates such as Lotte Shopping, Shinsegae Group's E-Mart, and private equity firm MBK Partners. SK Telecom, which had been keen on acquiring eBay Korea to accelerate its 'telecom exit' strategy, has shifted its stance toward not participating in the later stages of the acquisition battle.

Within the industry, Lotte Shopping and E-Mart have been known to be the most proactive in conducting due diligence on eBay Korea. Although SSG.com, operated by E-Mart, has achieved remarkable results online, its market share remains small. Acquiring eBay Korea would instantly put it on par with Naver and Coupang. Having declared an all-around partnership by exchanging shares worth 250 billion KRW with Naver in March, E-Mart is also likely to enter the final bidding for eBay Korea together with Naver.

Lotte Shopping views acquiring eBay Korea as a golden opportunity to compensate for the sluggish performance of Lotte On, which was launched last year. To this end, it has secured sufficient acquisition funds through store efficiency improvements carried out since last year.

MBK Partners expects synergy effects between online and offline channels by acquiring eBay Korea following Homeplus. Given its private equity nature, it is also analyzed that MBK believes it can increase the value of both companies when reselling them later.

Although the initial interest was successful, it is uncertain whether this atmosphere will continue in the final bidding competition. It is reported that eBay headquarters has proposed a sale price exceeding 5 trillion KRW, leading acquisition candidates to comment that "the price range is too high." Because of this, intense strategic maneuvering is underway among the companies, fearing the 'winner's curse,' making the final acquisition battle hectic.

Some speculate that the final bidding might be postponed once again. Just as it was initially scheduled for mid-last month and then delayed once, if the acquisition candidates offer amounts lower than the sale price expected by eBay headquarters, the final bidding could be postponed again or the sale itself might be canceled. There are also reports that eBay headquarters is attempting to negotiate to conclude the acquisition by contacting some candidates and offering separate conditions to boost bidding interest.

A distribution industry official said, "Acquisition candidates are most anxious that eBay Korea should not fall into the hands of competitors," adding, "Whoever acquires it will significantly expand their dominance in the e-commerce market, but the enormous price and additional investment burdens lower expectations for the final sale success."