EBay to sell its enterprise unit four years after buying it

Credit: Image credit: flickr/Caden Crawford

EBay has reached a deal to sell its enterprise unit, a division focused on building and running online shopping sites for brick-and-mortar retailers, for less than half of what it paid four years ago.

The $925 million deal, announced Thursday, will give control of eBay Enterprise to a group of private equity firms led by Sterling Partners and Permira Funds, eBay said in a press release.

EBay acquired its enterprise unit, then called GSI Commerce, in June 2011, for $2.4 billion. The unit has more than 500 customers, including Dick's Sporting Goods, American Eagle Outfitters, Abercrombie & Fitch, PetSmart, Ikea and Major League Baseball. Many of those businesses compete for online sales with eBay itself.

The sale of eBay Enterprise was prompted by "increasingly divergent business opportunities" between the enterprise unit and the rest of eBay, a spokeswoman said by email. Going forward, eBay will focus on serving small and medium-size businesses, while eBay Enterprise's main focus is on large retailers, the spokeswoman said.

GSI was founded in 1995 as a sporting goods seller and branched out into e-commerce in the 2000s.

The sale is an all-cash deal, the spokeswoman said. EBay expects the sale to close in the second half of this year, and eBay Enterprise to be renamed by early 2016.

Also on Thursday, eBay reported $4.4 billion in revenue for the second quarter of 2015, up from $4.1 billion a year earlier. Excluding one-time costs, net income was up 5%, to $931 million.

The quarterly earnings report comes just four days before eBay will split off its PayPal Holdings business to a separate entity. PayPal's revenue for the quarter was $2.3 billion, up 16% from a year earlier.

Earnings per share was $0.76, beating analyst estimates by $0.03. The company's share price was up 4.7% in Thursday morning trading.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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