The new relationship will allow eBay to increase its investment in China and help EachNet extend its success in e-commerce. With additional resources and continued best practice sharing, EachNet will be able to enhance the online trading experience of Chinese buyers and sellers and accelerate the company's growth. EachNet currently has more than two million confirmed registered users who trade a wide variety of items on its website.
"EachNet has built a great business and is in a fantastic position to take advantage of the long-term growth prospects of e-commerce in China," said Meg Whitman, President and CEO of eBay. "We're very excited to be increasing our commitment to EachNet and the future of China's vibrant Internet economy."
"Online trading is making commerce in China more efficient, and is creating unprecedented opportunities for small businesses and consumers in the world's most populous nation," said Bo Shao, EachNet's Chairman and CEO. "With the help of eBay's expertise in building successful marketplaces around the world, we have the potential to accelerate the growth of e-commerce in China."
China has more than 59 million consumers online today, making it the world's second-largest Internet population behind the United States, and it is predicted that the number will grow to 86 million by the end of 2003.(1) By 2005, China's e-commerce revenue is projected to grow to more than $16 billion.(2)
eBay will pay approximately $150 million in cash to acquire the remaining 67% of the stock of EachNet Inc. The transaction is expected to close during the third quarter of 2003. eBay expects the acquisition to have a nominal impact on 2003 revenues, but to be dilutive to 2003 full-year GAAP and pro forma diluted earnings per share. Based on an assumed closing date in Q3-03, eBay currently expects the acquisition to reduce GAAP and pro forma diluted earnings per share by $.02 in Q3-03 and $.01 in Q4-03.
eBay and EachNet first formed a strategic relationship in March 2002, at which time eBay acquired a 33% interest in EachNet.
EachNet is the leading e-commerce company in China, allowing its community of users to buy and sell a wide range of items, from clothing and antique calligraphy to computers and real estate, in both auction and fixed-price formats. EachNet was founded by Bo Shao and Haiyin Tan in 1999, and its early investors included Whitney & Co., AsiaTech Ventures Limited, and Orchid Asia Holdings. 2b interactive group advised EachNet on this transaction.
eBay is the world's online marketplace(TM). Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world.
This announcement contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, the reaction of the users and suppliers of EachNet to the transaction, the future growth of EachNet's services, the reaction of competitors and regulatory authorities to the transaction, foreign currency exchange rate fluctuations, and regulatory, political and economic conditions in China. The closing of the transaction is subject to certain conditions, including shareholder approval and certain regulatory approvals. More information about potential factors that could affect eBay's business and financial results is included in its Annual Report on Form 10-K for the year ended December 31, 2002, and its Quarterly Reports on Form 10-Q. All forward-looking statements are based on information available to eBay and EachNet on the date hereof, and neither company assumes any obligation to update such statements. (1) China Internet Network Information Center survey, January 2003. (2) IDC, Internet Commerce Market Model, 2001.