Ebay is being forced to offload its “primary classifieds operations in the UK” in order for its $9.2 billion merger to go ahead.
The UK Competition and Markets Authority (CMA) confirmed today that Ebay and Norwegian classified ads giant Adevinta had offered to offload Gumtree UK, Motors.co.uk and Shpock to “remedy” competition concerns raised last month.
It comes after the CMA said last month that Ebay’s multi-billion-dollar merger of its classified ads business with Adevinta could “reduce consumer choice, increase fees or lower innovation in the supply of platforms that allow people to buy and sell goods online”.
By offloading its UK businesses, which the pair state “represent less than five per cent” of their combined consolidated revenues, they hope that the CMA will allow the merger to go ahead.
The CMA announced today that “there are reasonable grounds for believing that the undertakings offered by Adevinta and Ebay, or a modified version of them, might be accepted by the CMA under the Enterprise Act 2002.”
The complex deal began in July when Adevinta agreed to purchase Ebay’s classified ads business, beating rivals including Naspers and Prosus despite them offering more cash.
Instead Adevinta agreed to sell a significant stake of its business to Ebay, making it the Norwegian company’s largest shareholder with an overall 44 per cent share and effectively turning the sale into a merger.
The deal would see the formation of the largest classified ads business on earth, spanning 20 countries and achieving revenues of around $1.8 billion last year, including an operating profit of $600 million.
The CMA sees this as a problem as it would give Ebay significant voting sway over Adevinta, leaving only Facebook Marketplace as a realistic competitor.
The pair added: “Ebay and Adevinta remain excited about the proposed combination of Adevinta and Ebay Classifieds Group and now target closing the transaction in Q2 2021, subject to final ratification of the remedies execution plan by the CMA and receipt of outstanding regulatory approval in Austria.”