EBay Korea LLC, South Korea’s largest open marketplace that operates Gmarket, Auction, and G9, is up for sale under the exit plan of its U.S. parent, stirring e-commerce players and retailers hungry for the 5 trillion won ($4.5 billion) deal for dominance in the Korean online commerce market growing at a staggering pace.

“EBay has initiated a process to explore, review, and evaluate a range of strategic alternatives for its Korea business,” the California-based eBay Inc. said in a statement on Wednesday. “The company is considering options that would maximize value for its shareholders and create future growth opportunities for the business.”

The global e-commerce leader entered the Korean market in 2001 by acquiring a major stake in Auction Co. for 850 billion won. The idea to sell its Korean unit after 20 years is in line with an overall reorganization carried out by its parent that has been falling behind Amazon.com in the U.S. e-commerce market. Since early last year, eBay has been under pressure from activist investors including Elliott Management to sell and spin off its subsidiaries including eBay Korea.

Now would be the best time to cash out of Korea due to fast expansion in the e-commerce market as the result of pandemic crisis. E-commerce transaction reached record 160 trillion won last year.

The Korean e-commerce market has gained traction with Amazon joining hands with online shopping site 11th Street to launch business and other big internet names like Naver expanding presence in the shopping scene.

In 2019, eBay Korea raised 1.095 trillion won in revenue, significantly less than 7 trillion won by industry leader Coupang. Its total annual transactions, however, stand at 19 trillion won, the largest in the country along with Naver and Coupang. Last year, transactions reached 160 trillion won in total.

Unlike Coupang that has logged up to 1 trillion won in annual losses, eBay Korea has been generating profit for 15 years. Despite increased competition, eBay Korea managed to report 61.5 billion won in profit in 2019.

EBay Korea is estimated to be valued at around 5 trillion won. The fact that it has less than 1,000 employees poses less burden and appeals to potential buyers. Cost efficiency based on integrated operations of three e-commerce players GMarket, Auction, and G9 is also another appealing factor.

According to multiple sources from the investment bank industry, U.S. private equity fund Kohlberg Kravis Robert (KKR) and largest shareholder of e-commerce platform TMON Inc. is reportedly interested in the eBay Korea sale. Other candidates are MBK Partners that acquired retailer Homeplus and Affinity Equity Partners that invested in online platform SSG.com.

Existing e-commerce players Naver, Coupang, and Kakao Shopping are also considered potential buyers as well as big retail names like Lotte Shopping, EMart, and GS Retail. Becoming the new owner of eBay Korea would make them cement No. 1 position in the local e-commerce market.

By Kim Gi-jung, Kim Tae-sung, Park Chang-young, and Lee Eun-joo

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