The field of e-commerce is starting rapidly to be consolidated and the classified sector has now come to the switch. eBay reported today that it had entered into an agreement to sell its Business Classifieds business to Adevinta, a major Norwegian classified ad publisher owned by Norwegian publisher Schibsted. The transaction is worth $9.2 billion including eBay’s $2.5 billion in cash and Adevinta’s 540 million shares. The contract has made eBay a 44% Adevinta shareholder with a voting interest of 33.3%.

Earlier in the week, Adevinta’s interest in eBay was announced but with the offer coming at a much lower value of $8 billion.

More broadly, it cuts off months of speculation on the future of the company classifieds, a product of long-term pressure from activist investors to make eBay more organized (advocating a reverberation of the Amazon, one would think). That included not only its website, but also classified ads, payment processing (PayPal, which was spun out as a separate company) and ticketing (Viagogo bought its Stubhub business last year in a $4 billion transaction, although this is now under some regulatory scrutiny).

Today, eBay is no longer a part of all three of those business divisions.

Adevinta is based in 15 countries and had 35 digital products and websites prior to this contract. Although Ebay now owns 12 brands worldwide in 13 countries, the coronavirus crisis has hit the company hard. eBay said that Classifieds’ revenues of only $248 million decreased 3 percent as announced, and stayed flat on an FX-neutral basis, in the last quarter. In some respects the unit of eBay’s Marketplace generated revenues in the same timeframe of $1.9 billion.

This would mean an increase in 20 countries’ classified ad footprint, and businesses think that the merger would carry in $150 million – $185 million in synergies.

“We are pleased we reached an agreement with Adevinta that brings together two great companies,” said Jamie Iannone, CEO of eBay, in a statement. “eBay believes strongly in the power of community and connections between people, which has been essential to our Classifieds businesses globally. This sale creates short-term and long-term value for shareholders and customers, while allowing us to participate in the future potential of the Classifieds business.”

Early Mover

With little text needed to build a very simple list of offers and a search tool, classifications are one of the first Internet hits and threaten newspapers and one of their most stable income sources (not that of course). For eBay, classifieds were an obvious place for jumping in at the early stages: they complemented its business, which at that time was strongly concerned with products being employed and selling goods at the auction, and not with the purchase, and for the sale with imagery and a dynamical sales pitch.

But over the years , the technology behind a “private ad” has evolved and so buyers and sellers suspect.

And classified ads now compete with a wide range of alternatives such as social and geographical networks which link people to the goods and services that they could buy or rent for example. They include like the marketplace of Facebook, but also realistic, mobile app-based listings and more. Any of them compromised the business model of the original disruptors.

Those who settled down in space have also played a role in globalization to develop and boost their economies of scale.

“With the acquisition of eBay Classifieds Group, Adevinta becomes the largest online classifieds company globally, with a unique portfolio of leading marketplace brands. We believe the combination of the two companies, with their complementary businesses, creates one of the most exciting and compelling equity stories in the online classifieds sector,” said Rolv Erik Ryssdal, CEO of Adevinta, in a statement.

“We have been impressed with eBay Classifieds Group’s achievements in recent years, leading across markets with nationally recognized brands including Mobile.de, Gumtree, Marktplaats, dba, Bilbasen, Kijiji, 2dehands, 2ememain, Vivanuncios, Automobile.it, Motors.co.uk, Autotrader (Australia), Carsguide (Australia), and eBay Kleinanzeigen, and innovating consistently across its product portfolio and advertising technology platform.”

There are no reports of termination or other changes at the moment, with the decision coming from eBay’s executive team.

“This deal is a testament to the growth and potential of the eBay Classifieds business,” said Alessandro Coppo, SVP and GM, eBay Classifieds Group. “We are excited for our local classifieds brands to join Adevinta and shape a global leader in an industry full of potential.”

In the first quarter of 2021, subject to regulatory and shareholder approvals, the agreement is scheduled to be concluded.

The Danish company of eBay Classifieds will be acquired in Schibsted when this arrangement ends.

“Schibsted’s Board of Directors and management strongly supports the agreement between Adevinta and eBay, as we are confident that it will further strengthen the value creation potential for Schibsted and the rest of Adevinta’s shareholders. Schibsted intends to continue to contribute to the value creation for all Adevinta shareholders as a significant long-term anchor shareholder,” Kristin Skogen Lund, CEO of Schibsted said in a statement.