eBay & Adevinta UK Site Sale: Gumtree, Motors.co.uk, Shpock

eBay and Adevinta to Divest UK Assets for Regulatory Approval

Following a $9.2 billion agreement to consolidate their classifieds divisions last year, eBay and Adevinta have announced plans to divest three prominent web properties within the United Kingdom. This action is intended to secure clearance from the Competition Markets Authority, the local regulatory body.

Details of the Proposed Sale

The companies intend to sell Adevinta’s Shpock, alongside eBay’s Gumtree and Motors.co.uk. These three UK-based platforms facilitate the buying and selling of used goods, as well as the offering and finding of various services.

The completion of these transactions is anticipated to coincide with the finalization of the larger eBay and Adevinta merger in the second quarter of 2021. This timeline is contingent upon receiving final regulatory approvals.

Joint Statement and Timeline

In a collaborative statement, the companies expressed continued enthusiasm regarding the proposed combination of Adevinta and eBay Classifieds Group. They are currently targeting a closure date in Q2 2021.

This is subject to the final ratification of the remedies execution plan by the CMA and the receipt of outstanding regulatory approval in Austria.

Financial Considerations and Acquisition History

Adevinta has indicated that the CMA will likely provide an update within 2-4 weeks regarding the sale. A specific price range for the properties has not yet been disclosed.

eBay’s 2019 Annual report revealed a $93 million investment for Motors.co.uk. Gumtree was acquired in 2005 through a series of purchases totaling just over $81 million. Schibsted completed its acquisition of a majority stake in Shpock in 2019 for an undisclosed amount.

Revenue Impact of the Divestments

Gumtree and Motors, representing eBay’s UK classifieds business, contribute less than 10% to the company’s overall consolidated classifieds revenues. These revenues exceeded $1 billion in 2019.

Similarly, Shpock’s revenues comprise less than 1% of Adevinta’s consolidated revenues, which totaled €740 million (approximately $894 million) in fiscal year 2019.

Adevinta is predominantly owned by Norwegian publisher Schibsted.

CMA’s Provisional Support

The CMA has provisionally stated its support for the deal, provided the sale of the three properties is successfully completed.

Importance of Competition

The CMA emphasized the importance of competition among online platforms for individuals selling used items or seeking bargains. Increased competition leads to improved services and reduced fees.

The agency will carefully review the proposed sale before making a final decision. This investigation is part of a broader series of merger probes focused on large digital mergers, aiming to preserve competition and protect consumer interests.

Decision Timeline

The CMA has until April 29, 2021, to determine whether to accept the proposed undertakings. This timeframe may be extended to June 28, 2021, under specific circumstances.

CMA’s Initial Concerns

The divestment decision stems from the CMA’s previous announcement that the original deal raised competition concerns.

Joel Bamford, Senior Director of Mergers at the CMA, stated the importance of consumer choice and competitive fees in the online marketplace.

He noted that without the deal, Gumtree and Shpock would likely have been direct competitors to eBay, the dominant player in the market.

Remaining Competition

The CMA also acknowledged that Facebook Marketplace remains a “significant competitor” in the online classifieds space.

The agency expressed concern that the merger could reduce consumer choice, increase fees, or stifle innovation in the supply of online buying and selling platforms.

Related CMA Investigation

Interestingly, eBay is also involved in another CMA investigation, albeit indirectly. The sale of StubHub to Viagogo for $4 billion, part of eBay’s broader streamlining efforts, was also scrutinized by the CMA.

The CMA recently ordered Viagogo to divest its business outside of North America, a significant setback given the disruption to the events industry.

Popularity of the Platforms

Despite representing a relatively small portion of eBay and Adevinta’s overall revenue, Gumtree, Shpock, and Motors.co.uk collectively serve as a popular option for individuals seeking to buy or sell used goods or find service providers in the UK.

These platforms are also utilized for reselling tickets.

Future of Classified Listings

The future of these platforms remains to be seen. Recent funding rounds, such as Wallapop’s $191 million raise, and Facebook’s continued investment in Marketplace, demonstrate ongoing interest in the classified listings market.

There is potential for growth both as standalone businesses and as features that enhance user engagement and advertising opportunities.

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