EBay Inc. is selling its ticket marketplace StubHub to European rival Viagogo for $4.05 billion in cash, allowing the company to focus on its main retail site and address pressure from shareholder activists.
Starboard Value and Elliott Management Corp., the New York-based hedge fund run by billionaire Paul Singer, earlier this year proposed a plan to improve EBay’s performance, including a sale of StubHub and the classifieds business. In March, the company agreed to add two activist-backed directors to the board and pledged to launch a strategic review.
EBay’s shares rose 3.6% to $36.44 at 9:31 a.m. Monday. They’re up about 29% this year, giving the San Jose, California-based company a market value of about $29 billion.
The pressure for change led to Devin Wenig’s departure as EBay chief executive officer in September. Wenig was fired after he failed to grow the marketplace platform and clashed with the board about not wanting to sell the classifieds business, people familiar with the matter said at the time.
Wenig took over EBay following its split with PayPal in 2015 and made bold promises of returning the marketplace to prominence. To compete against Amazon.com Inc., Wenig tried to freshen EBay’s image with younger shoppers, made the site easier to navigate and harnessed artificial intelligence to give EBay merchants real-time insights about what shoppers want and how much they’re willing to pay.
But the results have been slow to appear and EBay has continued to watch Amazon grow at a much faster pace and gobble up more market share and customers.
EBay bought StubHub in 2007 for $310 million as it sought to bolster its online marketplace for secondary sales of seats to concerts and sporting events. Today, it’s the largest resale ticket marketplace in the U.S., with about $1.1 billion in net transaction revenue in 2018, according to EBay filings. The unit accounted for about 11% of EBay’s total revenue in the third quarter.
Eric Baker, Viagogo’s founder and chief executive officer, co-founded StubHub while in business school, but left before the business was sold. “It has long been my wish to unite the two companies,” he said. “I am so proud of how StubHub has grown over the years and excited about the possibilities for our shared future.”
Combined, the companies will sell hundreds of thousands of tickets daily across more than 70 countries, according to the statement.
Geneva-based Viagogo was forced to make changes to its business after coming under fire from the U.K.’s Competition and Markets Authority for misleading customers. The CMA suspended court proceedings in September, saying the ticket re-seller had addressed concerns it was flouting laws designed to protect consumers.
The deal is expected to close by the end of the first quarter of 2020, the companies said.
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