The two South Korean retail companies, Lotte Group, and Shinsegae Group submitted their binding bids to acquire eBay Korea. Investment banking sources said that the two companies were the only parties that entered the final bidding among numerous candidates.
The other prospective buyers, SK Telecom and MBK Partners did not continue participating in the eBay bidding. An MBK Partners official also stated that the firm would continue observing the proceedings although it withdrew from the deal.
eBay Bidding
Since joining the South Korean market in 2000, eBay Korea had been operating Auction and Gmarket, two of the most sizeable domestic open market platforms. Aside from the two retailers, eBay Korea manages G9, a curated e-commerce platform. Additionally, eBay’s online open markets enable third-party sellers to establish connections with customers.
eBay Korea is currently the third-largest South Korean e-commerce platform. The e-commerce retailer also placed its acquisition price at 5 trillion won ($4.5 billion). However, industry analysts expect the deal to amount to 3 trillion won ($2.7 billion).
Previously in 2020, eBay Korea recorded a 12.8% market share, and a 20-trillion won ($18 billion) combined annual transaction value. SSG.com, Shinsegae’s digital shopping service, logged a 4 trillion won ($3.6 billion) yearly transaction value. Meanwhile, Lotte On’s annual transactions reached 7 trillion won ($6.3 billion).
Similarly, Coupang’s annual transactions amounted to 22 trillion won ($19.8 billion), while Naver’s record hit 27 trillion won ($24.3 billion).
Two competitors
Furthermore, Shinsegae teamed up with Naver Corp., the country’s biggest Internet company, to establish a consortium for the final bidding. This March, Shinsegae, and Naver strategically formed a 250 billion won ($221 million) share-swap deal, strengthening their e-commerce industry footing.
If Shinsegae and Naver successfully acquire eBay Korea, they would establish an e-commerce platform with a 55-trillion won annual transaction. Due to Naver’s top market position in the e-commerce industry, the Shinsegae-Naver partnership may encounter investigations from Korean antitrust regulators.
Lotte’s traditional retail operations currently fare better compared to its e-commerce business performance. Therefore, Lotte considers the eBay Korea acquisition as a golden opportunity to boost its existing e-commerce operations.
During the pandemic’s onset, the domestic online shopping sector grew exponentially. This development prompted local retail companies, including Lotte and Shinsegae, to catch up with market-leading competitors, including Coupang and Naver. Last year, South Korea’s online market transactions amounted to 161 trillion won, taking 27.2% of total retail accounts, increasing from 2019’s 21.4%.
