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ecorp To Sell eBay Australia Joint Venture Stake To eBay For US $65 Million (AUS$120 million)
August 28, 2002 Sydney: ecorp Limited (ASX: “ECP”) and eBay Inc. (Nasdaq: EBAY) today announced that eBay has agreed to acquire ecorp’s equity interest in their 50:50 eBay Australia and New Zealand joint venture for US$65 million (approximately AUD$120 million).
The sale is subject only to approval by Australia’s Foreign Investment Review Board (FIRB).
ecorp Chief Executive Officer Ms Alison Deans and Mr Matt Bannick, Senior Vice President, International of eBay said the decision to restructure the joint venture was a key milestone in the successful development of eBay Australia and New Zealand over the past three years.
“The change in ownership is a reflection of the evolving needs of the business as it enters a new stage in its lifecycle, and is also consistent with the development plans of both partners,” they said.
Ms Deans added: “We have enjoyed a close working partnership with eBay over the last three years, and have great respect for the brands, technology and management systems that it has brought to this partnership.
“These capabilities, together with ecorp’s local knowledge, marketing and promotion, have provided a potent combination that has enabled eBay Australia and New Zealand to grow into a successful business with strong financial performance, leadership position and growth trajectory.”
“The sale price confirms the success of this partnership in establishing a valuable business in Australia and reinforces ecorp’s track record in building Internet-based businesses.”
Mr Bannick of eBay said: “The success of eBay Australia and New Zealand is a result of the complementary strengths of eBay and ecorp. eBay’s business
model and ecorp’s business-building expertise, combined with marketing and promotion across PBL’s media properties, have enabled us to create one of the most popular e-commerce sites in the region. Buying the business outright will also enable us to bring it more in line with our other international businesses as part of our overall strategy to build a global online marketplace.”
In addition, eBay has agreed to expand, on a five-year basis, its marketing relationship with Australia’s leading Internet portal ninemsn, which is jointly owned by ecorp and Microsoft Corp.
The purchase of ecorp's equity interest in eBay Australia and New Zealand is expected to close in September or October of 2002.
Financial Impact
The sale by ecorp of its 50% interest in the eBay Australia and New Zealand joint venture for US$65 million (approximately AUS$120 million) will result in an estimated pre-tax profit of AUS$114 million.
This transaction is not expected to have a material impact on eBay's consolidated financial results for the third or fourth quarter of calendar 2002.
eBay also confirmed that based on its current business outlook, the purchase of ecorp's equity interest in the eBay Australia and New Zealand joint venture will not impact its most recent financial guidance for the third quarter and full year 2002 or its guidance for the full year 2003. Accordingly, the company's financial guidance provided on July 18, 2002, continues to be appropriate.
eBay Australia & New Zealand
Both companies acknowledged the contribution of Mr Simon Smith, the managing director of eBay Australia and New Zealand, and his local management team in the success of the business and reinforced their ongoing support.
ecorp and eBay jointly launched eBay Australia and New Zealand in October 1999 under the stewardship of Ms Deans, who was managing director of eBay Australia and New Zealand prior to joining ecorp in June 2000.
In the 12 months ended June 2002, eBay Australia and New Zealand achieved a 97% increase in gross merchandise sales (GMS) to $125.8 million and facilitated 4.4 million online auctions. More than 1.17 million*Australian unique visitors access eBay’s online trading platform each month.
About ecorp
ecorp is a leading Australia-based Internet business listed on the Australian Stock Exchange. Its interests include:
- ninemsn: a 50:50 joint venture with Microsoft, ninemsn is Australia’s #1 Internet portal.
- Ticketek: Australia and New Zealand’s leading ticketing services company.
- Wizard Financial Services Group:
a rapidly growing non-bank financial institution in which ecorp and Publishing and Broadcasting Limited jointly own a one-third stake.
- Monster: a joint venture with a leading global career site Monster to provide online career management services in the Asia-Pacific region.
- CrownGames: a 50:50 joint venture with Publishing and Broadcasting Limited which owns and operates the CrownGames online casino.
About eBay
eBay is the world’s online marketplaceTM.
Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world.
eBay's Forward-Looking Statements
This announcement contains forward-looking statements that involve risks and uncertainties, including those relating to eBay's ability to grow its business and user base.
Actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, the reaction of the users and suppliers of eBay Australia to the transaction, the future growth of eBay Australia’s services, and the reaction of competitors to the transaction.
Additional risk factors include eBay's need to manage an increasingly broad range of businesses, to deal with the increasingly competitive environment for online trading, to manage regulatory and litigation risks even as its product offerings and geographies expand, to maintain site stability and continue to expand its model to new types of merchandise and sellers, to continue to expand outside of the U.S., as well as the timing and commercial success of new features and functions added to the company's sites, the price and demand for advertising offered by the company, the success of the company's commercial partners, and the costs of announced and prospective joint ventures, acquisitions and other commercial transactions.
Additional factors that could cause or contribute to such differences and that relate to the announced acquisition of PayPal, Inc. include the possibility of delay or non-closure, the reaction of each company's user base to the acquisition, the future growth and identified risks relating to PayPal, and the possibility that the future integration of the two companies will be more difficult or costly than expected.
More information about potential factors which could affect eBay's business and financial results is included in the company's Annual Report on Form 10-K for the year ended December 31, 2001, its quarterly reports on Form 10-Q for the first and second quarters of 2002, its S-4 registration statement relating to the pending acquisition of PayPal, and its other S.E.C. filings and prospectuses.
All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements.
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