EBay announced today (Monday) that it has agreed to buy online
payment provider PayPal in a stock swap valued at $1.5bn
(£990m).
The auction powerhouse hoped that the deal would make buying and
selling merchandise online even more convenient for its 46 million
worldwide users by providing them with an integrated payment
system.
The acquisition, which is expected to close by the end of this
year, is subject to approval by stockholders and regulatory
agencies. EBay has agreed to acquire all outstanding shares of
PayPal in a tax-free, stock-for-stock transaction, the company
said.
The $1.5bn estimated purchase price is based on the value of
PayPal's stock last Friday. The actual purchase price may vary
depending on when the transaction closes and the fluctuation of
share values.
Nearly 60% of PayPal's business already takes place on eBay, while
the rest is handled by small merchants eBay hopes to woo to its
site, the companies said.
PayPal is also looking to widen its scope by accessing eBay's broad
user base, the companies added.
Under the terms of the proposed deal, PayPal would continue to
operate as an independent brand but would phase out its gaming
business because of the uncertain regulatory environment
surrounding gaming.
For its part, eBay planned to discontinue its existing payment
service, eBay Payments by Billpoint, at the close of the
transaction.
EBay said that it expects to incur incremental charges for
stock-based compensation and amortisation of intangible assets of
$4m (£2.6m) and $9m (£5.9m) per quarter if the deal goes through.