eBay Mulling Buyout of French Net Auction Firm

Seeking to further extend its international reach, online auction giant eBay is in negotiations to acquire FrenchInternet 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 uponwithin the week.

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

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

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

Globe Trotting

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

Although many e-commerce firms have floundered in recent months, eBay hascontinued to strengthen its foothold in the burgeoning online auctionmarket. Last month, the company opened a new site in Italy, providing buyersand sellers in the country with access to million of items listed on theauctioneer’s global sites and the ability to trade goods using its domesticcurrency.

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

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

Giant Rival

In addition to fueling its expansion plans, eBay’s potential acquisition ofiBazar would render it a formidable foe for rivals such as QXLRicardo Plc, which conducts consumer-to-consumer and business-to-consumerauctions across 13 western European countries.

Widely considered the most popular auction site in the UK, QXL Ricardo Plcboasts roughly 2 million members. In recent months, the London-basedcompany has been on a buying binge to strengthen itself against eBay’s pushinto the continent, purchasing rivals across Europe, including auction sites in France andGermany.

eBay’s Books

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

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

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

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