January 10, 2007 10:20 AM PST

eBay to buy StubHub for $310 million

Online auctioneer eBay has agreed to buy sports ticket reseller StubHub for $310 million in cash, the companies said on Wednesday, confirming an earlier report the deal was imminent.

In a statement, eBay said the agreement has an estimated total price of $310 million, which will include StubHub's net cash at the time of the deal's closing. The final amount will be determined based on a formula at the time the deal closes.

The acquisition is expected to close in the first quarter of this year, subject to pending approvals by regulators and StubHub shareholders. More details will be revealed at the time of eBay's fourth-quarter conference call on January 24, it said.

StubHub, which was founded in 2000, had more than $400 million in gross ticket sales last year. It has emerged as the leading independent player in the online resale market for sports tickets. Fans using the service can avoid the perils of scalping unused tickets.

eBay is StubHub's biggest competitor. Other major rivals include InterActiveCorp's Ticketmaster and Craigslist, along with gray-market stadium scalpers.

"StubHub has been extremely successful in the online tickets segment, and it's a perfect complement to eBay's tickets business," Bill Cobb, president, eBay North America Marketplaces, said in a statement announcing the deal.

In 2002, San Jose, Calif.-based eBay had come close to acquiring StubHub of San Francisco for $20 million, but that tentative agreement fell apart at the last minute over price, a source familiar with that deal said.

eBay shares closed down 45 cents, or 1.51 percent, at $29.30 on Nasdaq on Wednesday following reports eBay was ready to buy StubHub for a figure in the "low $300 millions."

StubHub offers a secure way to connect buyers and sellers of tickets, with a money-back guarantee to insure that buyers are not cheated out of tickets. Sellers send tickets via overnight delivery to buyers and StubHub acts as middleman to ensure the privacy of buyers.

StubHub boasts resale relationships with 30 big name professional and college sports teams, Fluhr said in an interview last month. It has begun to expand into the resale market for music concerts, theater tickets and other events.

"The strategic merits are fairly obvious: eBay, while being one of the largest ticket resellers is not the best known in the market. The company is picking up the best known brand and solidifying its position as the dominant online market place," said RBC Capital analyst Jordan Rohan.

The U.S. secondary ticket market had a turnover around $10 billion a year. This is in addition to the $25 billion primary ticket market not just for sports, but for music and other entertainment, Fluhr said.

The company first raised $2.1 million in funding in 2001 and has received an undisclosed amount of funding in additional rounds since then. Its last funding round was in 2005.

Investors include Allen & Co., Frank Biondi, Sandy Robertson of Francisco Partners and Steve Young, the ex-quarterback of the San Francisco 49ers, Fluhr said.

Story Copyright © 2008 Reuters Limited. All rights reserved.

 

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