EBay Inc. is selling its ticket marketplace StubHub to European rival Viagogo for $4.05 billion in cash, allowing eBay to focus on its main retail site and address pressure from shareholder activists.
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 $4.75 billion in gross merchandise value (GMV) in 2018, according to eBay’s financial statements. StubHub’s GMV accounted for about 5% of eBay’s $94.58 billion total GMV in 2018.
StubHub’s revenue, which it largely generates from charging sellers a commission fee on each sale, was $$1.08 billion in 2018 and accounted for 10.0% of eBay’s total $10.75 billion in revenue.
“While the bigger strategic question for eBay remains how to improve marketplace performance, we view this deal as a positive step in unlocking value, and should also allow management to focus more attention and resources on the core business,” Colin Sebastian, senior research analyst at Robert W. Baird & Co. wrote in a note.
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.
The pressure for change led to Devin Wenig’s departure as eBay CEO 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.
Eric Baker, Viagogo’s founder and CEO, 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.
Fareeha Ali contributed to this report
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