Business

Ebay to sell South Korea unit for $3.1bn as local rivals target Coupang

Ebay is set to sell its South Korea business to a local consortium for $3.1bn, according to people with knowledge of the matter, as rivals seek to turn up the heat on SoftBank-backed Coupang in the world’s fourth-largest ecommerce market.

The consortium, which consists of South Korea’s biggest bricks-and-mortar retailer E-Mart and internet group Naver, plans to buy an 80 per cent stake in eBay Korea for Won3.5tn ($3.1bn) with the US company retaining the remainder, said the people.

The purchase could help the consortium to overtake fast-growing Coupang, which raised $4.6bn in an initial public offering in New York in March to become the biggest player in South Korea’s highly competitive ecommerce market. Japanese technology group SoftBank is a large investor in Coupang.

Ebay Korea was the country’s third-largest ecommerce company with a 13 per cent market share last year, according to research group Euromonitor. Its three platforms — Gmarket, Auction and G9 — recorded Won20tn in transactions last year, data from Meritz Securities showed.

Euromonitor has forecast that South Korea’s ecommerce market will grow by 11 per cent this year to $116bn. But it is a fragmented market of more than a dozen players, with Coupang and Naver controlling 19 per cent and 14 per cent shares in terms of transaction volume, respectively.

South Korea is one of the world’s largest and fastest-growing ecommerce markets, driven by its tech-savvy population, high-speed internet infrastructure and densely populated environment. Ecommerce accounted for 35.8 per cent of the retail market last year, compared with 28.6 per cent in 2019, Euromonitor data showed.

E-Mart plans to fund the deal with Won3tn of asset-backed loans with the remainder paid by its cash holdings, while Naver will contribute Won100bn, according to an industry official close to the situation.

“Despite the funding structure, E-Mart needs Naver to make up for its weak online networks,” said the official.

Conglomerate Lotte Group and E-Mart were the final bidders for eBay Korea. Both have struggled to catch up with Coupang, which is investing heavily in logistics to boost its delivery times. Coupang almost doubled its revenues last year to $12bn as more consumers shifted to 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,” added the industry official.

Naver is one of Korea’s most popular internet portals and more than 40 per cent of eBay Korea’s customers access it via the former’s search engine.

Shinsegae, E-Mart’s parent company, and Naver partnered in March by swapping stakes in each other worth Won250bn.

Ebay Korea declined to comment. E-Mart said in a regulatory filing that it was in talks with eBay but a sale had not been finalised. Naver said in a separate filing that the deal had not been concluded.


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