eBay to buy Half.com for over US$300 mil

Online auction site eBay Inc. has agreed to buy Half.

Online auction site eBay Inc. has agreed to buy Half.com, another online trading place where consumers sell used books, CDs, and movies at a fixed price that is typically at half off the list price.

PALO ALTO, California, 14 June 2000 - eBay said it will pay for Half.com in stock, using a formula that is expected to work out to between 4.6 million and 5.5 million of its shares.

Based on eBay's closing stock price Tuesday of US$68 a share, the total value of the deal should be between US$312 and US$374 million.

Half.com was just launched in January and currently has 60 employees. eBay said it was impressed at how quickly it had grown and thought Half's fixed-price person-to-person trading model would complement its own auction model.

Half.com has already built up a base of 250,000 registered users and has more than four million items for sale. According to PCData, which tracks Web usage, it is the 18th most visited shopping site on the Internet.

"They have absolutely come out of nowhere to arrive at a very solid space," said an eBay spokesman. "Their business model is very much like eBay's in that they have no inventory, no sales force and generate fees based on transactions."

Unlike most e-commerce sites, which have been burdened with heavy costs associated with marketing and carrying inventory, auction sites simply bring buyers and sellers together. Sites like eBay have also gotten a lot of mileage from word-of-mouth referrals.

eBay said the all-stock acquisition will result in significant increases in operating expenses for the combined company for the next several quarters, but is expected to add to earnings in 2001.

The acquisition is expected to be completed during the third quarter.

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