As part of its global restructuring strategy, US e-commerce tech firm eBay has now sold one of its major assets in a deal worth $4 billion. The company announced on Monday that it has successfully sold its StubHub online ticketing business to its European rival Viagogo.
The all-cash deal will allow Viagogo to fully integrate StubHub into its system, significantly increasing its customer base and reach in Europe and in the United States. Once the deal is completed, the combined company will become one of the world's largest online ticketing platforms available in more than 70 countries. The sale of eBay's asset is expected to be completed by the first quarter of 2020, pending regulatory approvals.
Viagogo expects to sell hundreds of thousands of tickets using the combined company, hopefully getting their investment's worth in the next few years. Viagogo's founder and CEO, Erin Baker, mentioned in a statement that the company has been planning for the merger for quite some time. Baker added that the deal should result in a "win-win" situation for them and for ticket buyers around the globe.
Scott Schenkel, eBay's interim CEO, mentioned in a press release that the sale of StubHub should provide long term value to the company's shareholders. The executive also stated that the decision to sell the asset was the best path for both eBay and StubHub. Schenkel had replaced eBay's former CEO Devin Wenig, who stepped down from his position in September.
The sale of one of eBay's major assets is part of the company's broader business review and global restructuring strategy. In March, the company announced that it planned to conduct an extensive strategic examination of its business and its existing assets. The move was initiated after the company was pressured by activist investors, who wanted eBay to diversify its Classifieds Group and its other online businesses.
Part of the pressure came from activist investor Elliot Management, which has a 4 percent stake in the company. The hedge fund aggressively tried to force eBay's board to make radical changes to its business, similar to how it had forced changes in AT&T in the past.
StubHub was originally purchased by eBay in 2007 for $310 million. The online business basically sold tickets for different kinds of events ranging from sporting events to major concerts. Viagogo, which is based in Switzerland, has the same type of business model, reselling tickets for major events in Europe.
Following the news of the asset sale, eBay stocks immediately reacted with a 1.75 percent increase in early trading on Monday. The company's stock has increased by around 27 percent since the start of the year.
