EBay buys payment firm for almost $1B, plans 1,000 layoffs

IDG News Service - EBay Inc. announced two acquisitions on Monday and said it will lay off more than 1,000 staffers worldwide and cut back on recruitment.

The online auction company will pay almost $1 billion for U.S. online payment company Bill Me Later Inc. and around $390 million in cash for the operator of two Danish classified advertising sites, Dba.dk and Bilbasen.dk.

Bill Me Later is second only to PayPal Inc., the online payment operator that eBay already owns, the company said. The two services complement each other, with Bill Me Later able to offer delayed payment or financing options to eBay customers using PayPal, according to the company.

EBay will pay $820 million in cash and $125 million in outstanding stock options. It expects to close the deal by the end of the year.

Today, PayPal serves primarily small and midsize businesses. But the acquisition of Bill Me Later will allow the company to target larger customers, PayPal President Scott Thompson said in a conference call for investors.

PayPal's total payment volume reached $15 billion in the third quarter, eBay President and CEO John Donahoe said in the conference call. Its payment volume will soon exceed that of eBay's, with more than half of its transactions coming from eBay's site, he said.

This year, Bill Me Later's total payment volume should reach $1 billion, the companies said in a presentation to investors.

The Danish classified sites, one linked to newspaper Den Bla Avis and one for automobile buyers, will bring eBay an additional 186 million monthly page views, the company said. It now owns classified ads sites covering 1,000 cities in 20 countries.

The two sites "give us technology we can use to improve our other classified sites," Donahoe said. Worldwide, eBay has more classified traffic and three to four times more classified revenue than the well-known site of Craigslist, he said, adding that eBay also holds a stake in Craigslist Inc.

Alongside these acquisitions, eBay said it will lay off 1,000 staffers and several hundred temporary workers. The company said the worldwide layoffs will allow it to cut costs, although they will result in restructuring charges of up to $80 million in the fourth quarter.

"We have been very strategic about where these reductions will take place," said Donahoe. The cuts will save the company around $150 million a year, he said.

EBay said Monday that it now expects to exceed its previously announced earnings expectations when it announces its third-quarter earnings on Oct. 15, although revenue will be at the bottom end of the range the company indicated in July.