eBay to Acquire Majority Stake in Korea`s Internet Auction Co.

eBay Inc., (www.ebay.com), the world`s largest online trading community, today announced that it has signed an agreement to acquire a majority stake in Internet
Auction Co. Ltd., Korea`s largest auction-style web site (www.auction.co.kr). 
This strategic acquisition establishes eBay in Korea, the
second largest online market in Asia, and will open eBay`s global marketplace
to Internet Auction`s thriving community of 2.8 million registered users.  The
deal combines two Internet pioneers committed to expanding online trading
throughout Asia.
Korea is the sixth largest Internet market in the world with more than 16 million persons, approximately one third of the nation`s
population, on
line(1). Internet Auction introduced person-to-person trading in Korea when it launched in April 1998.  Today, it is the largest auction-style web site in
Korea, serving the needs of both consumers and businesses. Maintaining its
position as one of the fastest growing companies on the KOSDAQ, in November
Internet Auction hosted 465,000 new listings of a wide range of products and
services. The company was listed on the KOSDAQ in June 2000 and will continue
trading following consummation of the transaction.
The share acquisition is the latest step in eBay`s plan to establish its marketplace in countries that represent the majority of the world`s e-commerce revenue. In addition to its core U.S. site, eBay is currently in 7 markets,
including the United Kingdom, Germany, Austria, France, Canada, Australia and
Japan. With the majority ownership of Internet Auction, eBay will be
established in overseas markets that together represent nearly two thirds of
the world`s e-commerce revenue. Based on GMS, eBay is currently the number
one trading site in the U.K., Germany, Canada and Australia.
“This is a great match for us and a significant step forward for our global strategy,” said Meg Whitman, president and CEO, eBay Inc. “Internet Auction is a fantastic company. Auction`s management and its major
shareholders have done a great job building the company, and we look forward
to taking advantage of the strengths of our combined companies.”
“We have built Internet Auction into Korea`s number one auction web site,”
said Keum Ryong Lee, co-CEO of Internet Auction Co. “This is a wonderful next
step for our business, our users and shareholders.  Our users, in particular,
should gain tremendous value from the ability to trade globally that this deal
guarantees.” “As a founder of Internet Auction, I couldn`t be happier about this
alliance,” said Mr. Hyuk Oh, co-CEO of Internet Auction. “I believe this deal
will help ensure that Internet Auction and its users will continue to grow and prosper.”
 
The transaction will involve the purchase of slightly more than 50 percent of the outstanding shares of Internet Auction from three of its major shareholders:  Sung Moon Kwon, The Will-bes & Co. Ltd., and KTB Network Co. Mr. Kwon has significant interests in each of the latter two companies, both
of which are publicly traded on the Korea Stock Exchange.  All three shareholders are selling almost the entirety of their interests in the company in the transaction. “Internet Auction has found the best possible partner in eBay,” said Kwon. “It`s been a privilege to help build Auction, and I am sure the company will continue to maintain its market leadership.”
The terms of the transaction call for the purchase of shares at a fixed price of 24,000 won. Based on an exchange rate of approximately 1,250 won to
the dollar, eBay anticipates the expenditure of approximately $120 million in
cash. The transaction is currently expected to close in the first quarter of
2001, pending receipt of shareholder, board of director, governmental, and
regulatory approvals.  Internet Auction is currently expecting 2001 sales of
68 billion won as reported per Korean Generally Accepted Accounting Principals
(GAAP). Excluding non-cash charges and certain one-time costs, Internet Auction is expected to approach operational break-even cumulatively for the whole year.
The share acquisition is expected to increase eBay`s 2001 consolidated
revenue by approximately $20 million. On a pro-forma basis, the net income
adjusted for non-cash items, such as stock compensation and one-time charges,
is expected to lower eBay`s 2001 full year net income per share by about one
cent. On an as-reported basis eBay`s 2001 full year net income per share is
expected to be negatively impacted by about two cents.  This is largely due to
forgone interest income associated with the cash purchase. All of these
estimates exclude any amortization of goodwill.
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