eBay Mulling Buyout of French Net Auction Firm

Seeking to further extend its international reach, online auction giant eBay is in negotiations to acquire French Internet auction firm the iBazar Group, according to reports published Monday.

In its online edition, The Wall Street Journal said that the potential buyout is worth approximately US$92.9 million in stock and could be agreed upon within the week.

The French company, which launched its first site in the country in October 1998, has 1.7 million subscribers and claims to be the top auction site in France, Italy, Spain, Porugal, Sweden, the Netherlands, Belgium and Brazil.

iBazar had reportedly been in advanced merger talks with France Telecom Internet media and e-commerce unit Wanadoo, but the discussions fell through.

Representatives for both eBay and iBazar have declined to comment on the acquisition.

Globe Trotting

A purchase of iBazar by eBay -- which launched its own French site in October -- would make eBay the leading online auctioneer in Europe. According to industry analysts, Europe is shaping up to be a key online battleground because its Internet growth rates are poised to explode.

Although many e-commerce firms have floundered in recent months, eBay has continued to strengthen its foothold in the burgeoning online auction market. Last month, the company opened a new site in Italy, providing buyers and sellers in the country with access to million of items listed on the auctioneer's global sites and the ability to trade goods using its domestic currency.

The launch came on the heels of eBay's foray into the Korean market with the acquisition of a majority stake in Internet Auction Co. Ltd., South Korea's largest auction Web site, and the opening of a site in Austria to build on its existing German service.

eBay has also said that it aims to be in 10 countries by the end of this year and 25 countries by the end of 2005, allowing it to reach the majority of the world's online users. The Internet auction powerhouse currently has country-specific sites in the UK, Canada, Japan and Australia.

Giant Rival

In addition to fueling its expansion plans, eBay's potential acquisition of iBazar would render it a formidable foe for rivals such as QXL Ricardo Plc, which conducts consumer-to-consumer and business-to-consumer auctions across 13 western European countries.

Widely considered the most popular auction site in the UK, QXL Ricardo Plc boasts roughly 2 million members. In recent months, the London-based company has been on a buying binge to strengthen itself against eBay's push into the continent, purchasing rivals across Europe, including auction sites in France and Germany.

eBay's Books

Despite the competition, eBay remains one of the few e-commerce companies to turn a profit. In its fourth quarter earnings report, released last month, eBay said that strong growth in its online auctions helped it beat analyst estimates and allowed it to raise expectations for increases in the new year.

eBay said revenue for the quarter rose to $134.0 million, up from $73.9 million in the year-earlier quarter. Net income totaled $23.9 million, or 9 cents per fully diluted share, up from $5.1 million, or 2 cents, in the 1999 fourth quarter. Analysts had expected the company to earn 7 cents per share.

News of the possible iBazar acquisition apparently pleased eBay investors Monday morning. Shares of the company climbed 8.6 percent, or $3.81, to reach $48.38.