eBay to acquire majority stake in Korea's Internet Auction Co.

eBay today announced that it has signed an agreement to acquire a majority stake in Internet Auction Co. Ltd.,one of Korea’s auction-style web site.

eBay Inc., an online trading community, today announced that it has signed an agreement to acquire a majority stake in Internet Auction Co. Ltd., one of Korea’s auction-style web site.

This strategic acquisition establishes eBay in Korea and will open eBay’s global marketplace to Internet Auction’s 2.8 million community. The deal combines two Internet pioneers committed to expanding online trading throughout Asia.

Internet Auction introduced person-to-person trading in Korea when it launched in April 1998. That year November, Internet Auction hosted 465,000 new listings of a wide range of products and services. The company was listed on the KOSDAQ in June 2000 and will continue trading following consummation of the transaction.

The share acquisition is the latest step in eBay’s plan to establish its marketplace in countries that represent the majority of the world’s e-commerce revenue. In addition to its core U.S. site, eBay is currently in 7 markets, including the United Kingdom, Germany, Austria, France, Canada, Australia and Japan. With the majority ownership of Internet Auction, eBay will be established in overseas markets that together represent nearly two thirds of the world’s e-commerce revenue.

The transaction will involve the purchase of slightly more than 50 percent of the outstanding shares of Internet Auction from three of its major shareholders: Sung Moon Kwon, The Will-bes & Co. Ltd., and KTB Network Co. Mr. Kwon has significant interests in each of the latter two companies, both of which are publicly traded on the Korea Stock Exchange. All three shareholders are selling almost the entirety of their interests in the company in the transaction.

The transaction will involve the purchase of slightly more than 50 percent of the outstanding shares of Internet Auction from three of its major shareholders: Sung Moon Kwon, The Will-bes & Co. Ltd., and KTB Network Co. Mr. Kwon has significant interests in each of the latter two companies, both of which are publicly traded on the Korea Stock Exchange

The terms of the transaction call for the purchase of shares at a fixed price of 24,000 won. Based on an exchange rate of approximately 1,250 won to the dollar, eBay anticipates the expenditure of approximately US$120 million in cash. The transaction is currently expected to close in the first quarter of 2001, pending receipt of shareholder, board of director, governmental, and regulatory approvals. Internet Auction is currently expecting 2001 sales of 68 billion won as reported per Korean Generally Accepted Accounting Principals (GAAP). Excluding non-cash charges and certain one-time costs, Internet Auction is expected to approach operational break-even cumulatively for the whole year.

The share acquisition is expected to increase eBay’s 2001 consolidated revenue by approximately US$20 million. On a pro-forma basis, the net income adjusted for non-cash items, such as stock compensation and one-time charges, is expected to lower eBay's 2001 full year net income per share by about one cent. On an as-reported basis eBay’s 2001 full year net income per share is expected to be negatively impacted by about two cents. This is largely due to forgone interest income associated with the cash purchase. All of these estimates exclude any amortization of goodwill.

About eBay

Founded in 1995, eBay created a marketplace for the sale of goods and services by a passionate community of individuals and small businesses. eBay enables trade on a local, national and international basis with local sites in 60 markets in the U.S. and country specific sites in the United Kingdom, Canada, Germany, France, Austria, Japan and Australia. With the acquisition of Half.com in July 2000, eBay’s community now benefits from a marketplace combining traditional auction and fixed-price trading.

About Internet Auction

Internet Auction Co., Ltd. began service in April 1998 as the first Korean company to offer online trading. Its advanced escrow system guarantees secure transactions from settlement and delivery to payment. The company was listed on the KOSDAQ in June 2000.

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