Ebay is set to sell its South Korean business to a local consortium for $ 3.1 billion, according to people with knowledge of the matter, as rivals seek to step up pressure on SoftBank-backed Coupang in the fourth global e-commerce market.
The consortium, which consists of South Korea’s largest brick-and-mortar retailer E-Mart and Internet group Naver, plans to buy an 80% stake in eBay Korea for 3.5 billion won (3, $ 1 billion), with American society keeping the rest, the people say.
Purchase could help consortium overtake rapid growth Coupang, which raised $ 4.6 billion in an initial public offering in New York in March to become the largest player in South Korea’s highly competitive e-commerce market. Japanese tech group SoftBank is a major investor in Coupang.
Ebay Korea was the country’s third-largest e-commerce company with a 13% market share last year, according to research group Euromonitor. Its three platforms – Gmarket, Auction and G9 – recorded 20 billion won in transactions last year, according to data from Meritz Securities.
Euromonitor forecast South Korea’s e-commerce market to grow 11% this year to $ 116 billion. But it is a fragmented market of more than a dozen players, with Coupang and Naver controlling 19% and 14% respectively in terms of transaction volume.
South Korea is one of the largest and fastest growing e-commerce markets in the world, thanks to its tech-savvy population, high-speed internet infrastructure and densely populated environment. E-commerce accounted for 35.8% of the retail market last year, up from 28.6% in 2019, according to Euromonitor data.
E-Mart plans to fund the asset-backed loan deal with Won3tn, with the remainder paid for from its cash, while Naver will contribute to Won100bn, according to an industry official familiar with the situation.
“Despite the funding structure, E-Mart needs Naver to compensate for the weakness of its online networks,” said the official.
The Lotte Group conglomerate and E-Mart were the last bidders for eBay Korea. Both have struggled to catch up with Coupang, which is investing heavily in logistics to increase delivery times. Coupang nearly doubled its revenue last year to $ 12 billion, as more consumers turned to online shopping during the Covid-19 pandemic.
“Lotte and E-Mart were eager to resume operations from eBay, but E-Mart offered around 500 billion won more,” the industry official added.
Naver is one of Korea’s most popular internet portals and more than 40 percent of eBay Korea customers access it through the premier search engine.
Shinsegae, E-Mart’s parent company, and Naver teamed up in March to trade stakes worth 250 billion won.
Ebay Korea declined to comment. E-Mart has said in a regulatory filing that it is in talks with eBay but a sale has not been finalized. Naver said in a separate file that the deal had not been reached.