eBay Acquires Bill Me Later for $945 Million

[mandy]

eBay Inc. (NASDAQ: EBAY) today announced that it has reached a definitive agreement to acquire Bill Me Later®, the number two online-oriented payments brand, for approximately $820 million in cash and approximately $125 million worth of outstanding options, net of option exercise proceeds. The acquisition extends the company’s leadership in payments by combining Bill Me Later with eBay’s PayPal, the number one online-oriented payments brand. Subject to various closing conditions, the deal is expected to be completed by year-end...

The deal offers strong synergies within the eBay portfolio. Bill Me Later can offer its deferred payments and promotional financing service to the tens of millions of customers who use eBay and PayPal.  PayPal expands its customer base to approximately 1,000 of the most popular Web sites and to the millions of online shoppers who use Bill Me Later...

eBay anticipates that Bill Me Later will generate an estimated $150 million in revenue in 2009. For the fourth quarter of 2008, eBay expects the acquisition to be dilutive to non-GAAP and GAAP earnings per share by $0.03 and $0.05, respectively.  For the full year 2009, eBay expects the transaction to be dilutive to non-GAAP and GAAP earnings per share by $0.06 and $0.13, respectively.  eBay expects the deal to be accretive in 2011...

full press release: http://corporate.billmelater.com/billmelater/Content.do?pageID=12&moduleID=289

BML stats
Some datapoints revealed today about BML's biz:

    * BML is offered by 75 of the top 200 merchants in the IR500.
    * BML's Transaction Payment Volume (TPV) is $1b/yr (2008E) vs. 800m last year (25% y/y)
    * BML's revenues are estimated to be $130m this year (meaning eBay effectively paid  7x revenue) (see my risk factors below)
    * BML has a 46% repeat user rate (like a credit card once consumer gets the BML credit, if they don't use it, they can come back)
    * BML has 4m registered users (vs. Paypal's 80m+)
    * BML has a 12.5% take rate on TPV
    * BML's profitability wasn't really detailed

The Acquisition

    * eBay is acquiring BML for $820m and $125 in options
    * The deal will add $150m in 09, and dilutive by $.06 on EPS
    * Will be accretive by 2011 (wow, long time for a payoff)
    * eBay will be assuming a $550m book of receivables (yikes, that sounds like almost all of last years TPV).
    * John Donahoe said the acquisition is less than half it would have been a year ago on the conf call.

full article: http://ebaystrategies.blogs.com/ebay_str...-gulp.html

Today eBay said it would spend $945 million to buy online payment company Bill Me Later, but the folks over at Amazon.com aren’t likely to welcome eBay as Bill Me Later’s new corporate overlords. Amazon holds an equity stake in the payment processing company and is its top customer — with competitor eBay moving to buy it, Amazon has some thinking to do.

Amazon doesn’t have a board seat at Bill Me Later, and as such was probably not involved in the acquisition talks. The question now is whether it will continue to offer Bill Me Later as a payment option...

full article: http://gigaom.com/2008/10/06/will-amazon...akes-over/