eBay sells StubHub to Viagogo for $4.05 billion
After a lengthy consultation period sparked by hedge fund and activist investor Elliott Management, eBay has confirmed that it’s offloading its ticket marketplace StubHub to Viagogo in an all-cash deal worth $4.05 billion.
This represents a substantial markup on the $310 million eBay paid for the company back in 2007 and a 400% premium on the roughly $1.2 billion StubHub generates in revenue annually.
“We believe this transaction is a great outcome and maximizes long-term value for eBay shareholders,” said interim eBay CEO Scott Schenkel in a press release.
Transitions
San Jose-based eBay has been mulling a major transition for the better part of a year, after Elliott Management which owns around 4% of eBay suggested that the company would be able to generate far more value if it sold or spun out its various components into separate businesses. The idea was that focusing on its marketplace business, which currently generates most of eBay’s revenues, would allow the company to improve its core business without distractions.
The other two main components of eBay’s business were its classifieds unit, which operates under various brands globally such as Gumtree in the U.K. and StubHub, which we now know is being sold to Viagogo in a deal that should close in Q1 2020.
Certainly, eBay is no stranger to spinning out companies. Back in 2014 it revealed plans to spin PayPal into a standalone company, following a long and contentious feud with activist investor Carl Icahn. And in 2015 eBay finally made PayPal a standalone company once again. For context, PayPal now has a market cap of $120 billion, roughly 4 times that of its former parent company.
The ongoing divestment saga led CEO Devin Wenig to step down back in September, with CFO Schenkel taking the helm on a temporary basis. Wenig tweeted at the time that his reason for leaving was a lack of agreement with the board on the company’s new direction, so it seemed fairly clear something was in the works.
In the past few weeks it became clear that I was not on the same page as my new Board. Whenever that happens, its best for everyone to turn that page over. It has been an incredible privilege to lead one of the worlds great businesses for the past 8 years.
— Devin Wenig (@devinwenig) September 25, 2019
“Over the past several months, eBay’s leadership team and board of directors have been engaged in a thorough review of our current strategies and portfolio, and we concluded that this was the best path forward for both eBay and StubHub,” Schenkel said. “We firmly believe in the StubHub business, and we are excited about its future growth potential with Viagogo as its owner.”
While the synergies between StubHub and Viagogo are obvious, given that they both operate event ticket marketplaces, it’s worth noting that StubHub and Viagogo also share a cofounder. Eric Baker helped create StubHub while at Stanford University back in 2000, but he departed before it was bought by eBay in 2007. Baker later launched Viagogo out of Europe in 2006 and has served as CEO ever since.
“It has long been my wish to unite the two companies,” Baker said. “I am so proud of how StubHub has grown over the years and excited about the possibilities for our shared future. Buyers will have a wider choice of tickets, and sellers will have a wider network of buyers. Bringing these two companies together creates a win-win for fans more choice and better pricing.”