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GSI is an e-commerce and digital marketing company that also powers RueLaLa.com and ShopRunner.com
E-commerce giant eBay on Monday announced that it has agreed to acquire GSI Commerce, an e-commerce and digital marketing solutions provider, for $29.25 a share, totaling approximately $2.4 billion. The price represents a 51% premium over GSI's closing price on March 25, and a 47% premium over the average closing price of all GSI common stock over the last 30 trading days prior to the acquisition. The deal will be financed with cash and debt and is expected to close in Q3 2011, after it gets shareholder approval and goes through the standard regulatory process.
Based out of San Jose, Calif., GSI is a full-service e-commerce and digital marketing solutions provider that covers order management, payment processing, fulfillment, and customer care for its e-commerce customers. For its digital marketing customers, the company offers database management and segmentation, marketing distribution, a digital agency to drive strategic direction, and an advertising analytics and attribution management platform.
“Technology is changing how consumers shop, and retailers and brands are changing how they compete,” said John Donahoe, CEO and President of eBay, in a prepared statement. “With its complementary strengths, GSI will extend the power of our portfolio."
The company also offers two consumer-facing sites of its own where retailers can interact directly with customers. RueLaLa.com, a high-end fashion flash sales site, and ShopRunner.com, a members-only site that offers free shipping for online purchases from large national retailers, are GSI's two e-commerce platforms, but eBay doesn't have much interest in them and will be divesting 70% of the sites, which will be sold to a newly formed holding company led by GSI's founder and CEO Michael Rubin. Ebay is also leaving out 100% of GSI's licensed sports merchandise business, which will also be sold to Rubin's new holding company.
Ebay plans to loan the new holding company $467 million for a 30% stake in ShopRunner.com and RueLaLa.com, and Michael Rubin will invest an additional $31 million in teh project.
Under the terms of the agreement, GSI can shop around for better offers for the next 40 days. Goldman Sachs and Peter J. Solomon Company are acting as financial advisors to eBay, while Dewey & LeBoeuf LLP is acting as its legal advisor, while GSI is getting financial advice from Morgan Stanley and legal advice from Davis Polk & Wardwell LLP.
"Our first pass is that this is an incremental strategic deal for eBay. Not a dramatic strategy changer," said Citi Investment analyst Mark Mahaney in a report released Monday morning. "If this integration is well executed, there is the long-term possibility of an improved eBay Marketplace, which would be a thesis changer on this stock."
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