Skepticism persists over eBay's successful exit from Korea

eBay headquarters in San Jose, California / EPA-Yonhap

Goldman Sachs, Morgan Stanley said to handle tall task

By Park Jae-hyuk

Local brokerage analysts have expressed skepticism over whether Goldman Sachs and Morgan Stanley will be able to help eBay sell its sluggish Korean operation for the price it wants, 5 trillion won ($4.6 billion).

According to media reports and industry sources, Wednesday, the U.S. e-commerce giant hired the two global investment banks late last year as dual-underwriters in the unloading of eBay Korea ― replacing Credit Suisse. The latter was unable to get the deal done successfully last year.

Some sources said eBay has already begun taking the necessary procedures for due diligence, although its Korean operation has continued to deny speculation about the sale.

Those mentioned as potential buyers include conventional retailers Lotte, Shinsegae and Hyundai Department Store, and foreign and local private equity firms (PEFs), such as MBK Partners, Affinity Equity Partners, Kohlberg Kravis Roberts (KKR) and Anchor Equity Partners ― all of which declined to confirm any possible interest.

Hana Financial Investment analyst Park Jong-dae said Coupang was also open to acquiring eBay Korea to increase market share before its ambitious listing on the Nasdaq; however, Park was skeptical about eBay Korea's valuation, saying its book value was too low.

"EBay Korea isn't ideally positioned to appeal to large offline retailers here in terms of attractiveness because its market share is not high enough to create synergy," he said.

Hanwha Investment & Securities analyst Nam Sung-hyun said eBay Korea was "overvalued."

"The U.S. firm will not be able to sell its Korean subsidiary for 5 trillion won because the supremacy of the market has already gone to Naver and Coupang," he said. "It will continue to try to sell its Korean business anyway (mostly) due to its low growth potential. The company missed the right moment to make additional investments."

The operator of Gmarket and Auction online marketplaces has been rumored to be put on the local M&A market over the past two years.

Elliott Management's interference in eBay in the U.S. since early 2019 has also led market insiders to anticipate the sale of the Korean operation as the activist hedge fund ― with a 4 percent stake ― has demanded larger-scale restructuring. The e-commerce firm accepted some demands by offering Elliott a seat on its board and selling the online ticketing platform StubHub.

In late 2019, eBay Korea was changed into a limited liability company which is not obliged to disclose its financial statement.

Although the company voluntarily announced in April last year that its 2019 sales rose 12 percent, year-on-year, to 1 trillion won and its operating profits soared 27 percent to 61.5 billion won, market analysts regarded the announcement as part of its U.S. headquarters' efforts to raise the unit's valuation amid deteriorating growth.

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