Auction giant eBay buys GSI Commerce for $2.4 billion

By Geoff Duncan March 28, 2011

Image used with permission by copyright holder

It might just be a sign the worldwide economic downturn is coming to an end…or at least not getting any worse. Online auction giant eBay has announced it will be buying online marketing company GSI Commerce for a whopping $2.4 billion in cash and debt. And, just to prove that this move is about bringing GSI’s digital marketing savvy into eBay, eBay plans to spin off GSI’s existing retailing and shopping operations as “not core” to their long term strategy.

“We intend to lead the next generation of commerce innovation,” said eBay president and CEO John Donahoe, in a statement. “The acquisition of GSI, which offers the most comprehensive integrated suite of online commerce and interactive marketing services available, will significantly strengthen our ability to connect buyers and sellers worldwide.”

eBay already operates one of the largest online marketplaces on the planet, and its subsidiary PayPal is the Internet’s leading online payments service. With the GSI acquisition, eBay hopes to make its platform an end-to-end solution for major brands and retailers looking to sell their products online: eBay will be able to handle the actual marketplace, handle the financial transactions, and—with the GSI acquisition—hopefully give those brands and retailers leading marketing, advertising, and customer engagement tools to make the most out of their online efforts. GSI’s existing clients include the likes of Adidas, Ralph Lauren, Mattel, and QVC.

As part of the transaction, eBay will divest 70 percent of GSI’s ShopRunner and Rue La La online shopping endeavors, along with 100 percent of GSI’s existing licensed sportswear business. Those assets will wind up with a newly-created holding company owned by GSI founder Michael Rubin.

eBay expects the deal will close in the third quarter of 2011.

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