The acquisition will give eBay an opportunity to significantly increase its global presence, the company said, by giving it a foothold in India, the second most populous country in the world, behind only China.
eBay CEO Meg Whitman labeled the proposed buyout as an important step in expanding her company's international operations and said the auctioneer is entering India just as the online retail market in that country is poised for growth.
"Although it's early days for e-commerce in India, we believe there is great opportunity over the long term," Whitman said in a statement.
While Internet penetration in India pales in comparison to other geographies, including eBay's home court in the United States, industry watchers have tabbed the country as a potential hot spot for growth. According to market researcher IDC, there are about 17 million people currently using the Internet in India, and that figure is expected to reach 30 million by 2006.
Baazee, which claims more than 1 million registered customers, mirrors eBay's business model of letting individuals buy and sell items via online auctions. Offering a seemingly endless range of items much as eBay does, Mumbai-based Baazee identifies itself as the largest online marketplace in India. Executives at the auction house pointed to the proposed acquisition as a validation of their strategies.
"Our local expertise combined with eBay's global perspective will allow us to take e-commerce in India to the next level," Avnish Bajaj, chairman of Baazee, said in a statement.
Under the terms of the deal, San Jose, Calif.-based eBay will acquire all outstanding shares of Baazee for about $50 million, in addition to other transaction-related expenses. The companies said they expect the deal to close sometime during the third quarter. eBay indicated that it does not expect the acquisition to have a material impact on its 2004 earnings or to affect previously announced financial guidance.