“The completed sale of StubHub to viagogo is a great outcome both in terms of the $4.05 billion sale price and the potential StubHub has with its new owner. The StubHub transaction reinforces our commitment to creating shareholder value and is consistent with other steps we have taken such as margin improvement, share buybacks and issuing dividends. We are operating with discipline and focus, improving financial performance and delivering improved customer experiences.”Scott Schenkel, interim CEO of eBay Inc.
The completion of this transaction results in net proceeds of $3.1 billion. With the divestiture of StubHub complete, the Company updated its capital allocation plans and first-quarter and full-year guidance figures.
With the proceeds from this sale, eBay plans to buy back $4.5 billion in shares in 2020 instead of the originally announced $1.5 billion. In simple terms, the share buyback will increase the ownership stake of each investor in the Company and provide greater shareholder value.
For the first quarter of 2020, eBay now expects net revenue between $2.31 billion and $2.36 billion, reflecting the impact of removing StubHub.
For the full year of 2020, eBay now expects net revenue between $9.56 billion and $9.76 billion, again reflecting the impact of removing StubHub.
What About The CMA Order to Halt Integration Between StubHub and Viagogo?
This gets a bit technical. The UK antitrust watchdog (CMA – Competiton and Markets Authority) placed a hold on the integration of the two ticket marketplaces with its “Initial Enforcement Order.”
The key is in the word “integration,” and as StubHub said in its statement the other day, “…we do not expect any impact to the planned close of the Stubhub and Viagogo transaction. We are on track as previously communicated to complete the sale by the end of the first quarter of 2020.”
Within the restrictions of the CMA Initial Enforcement Order, the sale was allowed to be completed, but StubHub must continue to operate as a distinct business from Viagogo.
Only after the CMA clears the merger can Viagogo implement integrations between the two ticket marketplaces.
If the CMA puts up a roadblock to a merger, Viagogo would have to negotiate with the CMA what steps the company has to take for it to absorb StubHub.
Yeah, it’s all a bit confusing for non-financial types. The bottom line is eBay no longer owns StubHub and is using the proceeds from the sale to build shareholder value by buying back more stock.
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