According to people familiar with the matter, Ebay is preparing to sell its South Korean business to a local consortium for US$3.1 billion, as competitors are trying to increase the popularity of SoftBank-backed Coupang in the world’s fourth largest e-commerce market.
The consortium consists of South Korea’s largest brick-and-mortar retailer E-Mart and Internet conglomerate Naver. It plans to buy an 80% stake in eBay South Korea for 350 million won ($3.1 billion). The US company retains the remainder, people said.
The acquisition can help the consortium surpass the fast-growing market CouponRaised US$4.6 billion in an IPO in New York in March, making it the largest player in Korea’s highly competitive e-commerce market. Japanese technology group SoftBank is a large investor in Coupang.
According to data from research institute Euromonitor, Ebay Korea is the third largest e-commerce company in South Korea, with a market share of 13% last year. Data from Meritz Securities shows that its three platforms-Gmarket, Auction and G9-had a transaction volume of 2 billion won last year.
Euromonitor predicts that South Korea’s e-commerce market will grow by 11% this year, reaching US$116 billion. But this is a decentralized market composed of more than a dozen participants. In terms of transaction volume, Coupang and Naver control 19% and 14%, respectively.
South Korea is one of the largest and fastest growing e-commerce markets in the world, thanks to its technology-savvy population, high-speed Internet infrastructure and densely populated environment. Euromonitor data shows that e-commerce accounted for 35.8% of the retail market last year, compared with 28.6% in 2019.
According to an industry insider who knows the situation, immate plans to provide Won3tn with asset-backed loans, the rest will be paid by the cash it holds, and Naver will invest 100 billion won.
“Despite the funding structure, E-Mart needs Naver to make up for its weak online network,” the official said.
Lotte Group and E-Mart are the final bidders for eBay Korea. Both companies are trying to catch up with Coupang, which has invested heavily in logistics to shorten delivery times. As more consumers switch to online shopping during the Covid-19 pandemic, Coupang’s revenue almost doubled last year to US$12 billion.
The industry insider added: “Both Rakuten and Tesco are eager to take over eBay’s business, but Tesco has provided an offer of about 500 billion won.”
Naver is one of the most popular Internet portals in South Korea, and more than 40% of eBay South Korean customers access it through the former search engine.
Shinsegae and Naver, the parent company of E-Mart, cooperated in March to exchange shares worth 250 billion won.
EBay Korea declined to comment. E-Mart said in a regulatory document that it is negotiating with eBay, but the transaction has not yet been finalized. Naver stated in a separate document that the transaction has not yet been completed.