June 13, 2000 3:30 PM PDT

eBay to acquire Half.com in stock deal

eBay said late Tuesday that it will acquire Half.com in a stock deal signaling the online auctioneer's first foray into a fixed-price business model.

eBay (Nasdaq: EBAY) said it will issue between 4.6 million and 5.5 million shares for all outstanding shares of Half.com.

Half.com is a fixed-price person-to-person marketplace for previously owned products like books, CDs, games, DVDs and videos, with all items selling for at least half off the list price. The company has 250,000 registered users and 4 million items for sale.

According to PCData, which tracks Web usage, Half.com is the 18th most visited shopping site on the Internet.

eBay said the all-stock acquisition will result in significant increases in operating expenses for the combined company for the next several quarters, but is expected to add to earnings in 2001.

"Half.com's fixed-price format complements eBay's current business by giving our existing users new choices for trading," said CEO Meg Whitman in a prepared release. "Half.com will also attract a whole new group of buyers and sellers to the world's largest trading platform."

The Half.com Web site will continue to operate independently with founder Joshua Kopelman as president, reporting to an eBay executive. Both Half.com and eBay sites will promote the other.

The deal is expected to close sometime in the third quarter.

CMGI (Nasdaq: CMGI), which reported its third0-quarter results Tuesday, holds a minority stake in Half.com.

eBay shares closed up 1 3/16 to 68 ahead of the announcement.

In its latest quarter, eBay easily topped analysts' estimates, earning $8 million, or 6 cents a share, on sales of $85.8 million.

Its shares moved up to a 52-week high of 127 1/2 in March before splitting 2-for-1 in May. The stock hit a low of 35 1/8 in August.

First Call Corp. consensus expects it to earn 3 cents a share in its second quarter.

Reuters contributed to this report.

 

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