Ebay to sell StubHub to Viagogo for $4bn
Ebay, which has come under pressure from activist investors this year, has struck a $4.05bn deal to sell its online ticketing subsidiary StubHub to rival reseller Viagogo.
The all-cash deal will see Eric Baker, the chief executive of privately held Viagogo, reunited with StubHub, which he co-founded in 2000.
It comes after eBay in March conceded to calls from activist investors Elliott Management and Starboard Value to launch a strategic review of the business. The two hedge funds have been calling for eBay to divest StubHub and its online classifieds business since January.
The planned disposal of StubHub follows eBay’s spin-off of PayPal in 2015. While PayPal’s shares have more than tripled in value since then, eBay’s have struggled to maintain momentum in recent years, as it lost ground to rivals such as Amazon and Shopify. It has also seen the emergence of new competition including second-hand clothing app Depop and specialist trading sites such as footwear-focused StockX and Goat.
Ebay acquired StubHub in 2007 for $310m. While gross merchandise volumes reached $4.8bn last year, making up around 5 per cent of eBay’s total, the division’s annual growth slowed to 5 per cent in 2018.
“We believe this transaction is a great outcome and maximises long-term value for eBay shareholders,” said Scott Schenkel, interim chief executive officer of eBay Inc. “Over the past several months, eBay’s leadership team and board of directors have been engaged in a thorough review of our current strategies and portfolio, and we concluded that this was the best path forward for both eBay and StubHub. We firmly believe in the StubHub business and we are excited about its future growth potential with Viagogo as its owner.”
Mr Baker said: “It has long been my wish to unite the two companies.” The combination would offer greater choice for ticket buyers and give sellers access to a larger marketplace, he said.
Viagogo, which was founded in London in 2006, has become the focus of controversy in the UK in recent years. It faced the threat of legal action from the Competition and Markets Authority, which forced it to become more transparent with buyers of second-hand tickets, and in March British MPs warned consumers against using the site, which it accused of “flouting consumer law”. The CMA said in September that Viagogo had “now addressed outstanding concerns about how it presents information to its customers”.
The transaction is expected to close in the first quarter of 2020 and is subject to regulatory approval.
Viagogo is financing the acquisition by raising new capital from investors including Bessemer Venture Partners and Madrone Capital.