Ebay Set to Rival Amazon with GSI Buy

In a bid to expand its business strategy, online marketplace eBay is set to buy GSI Commerce in the hopes of positioning itself at the forefront of "the next generation of commerce innovation".

Ebay announced that the $2.4bn (£1.49bn) acquisition of the online commerce and marketing services company was subject to shareholder approval. John Donahoe, president and chief executive of eBay, backed the takeover, urging that it would "strengthen our ability to connect buyers and sellers worldwide."

eBay claims the acquisition will improve its position as a global commerce partner of choice for retailers and will move them into the same space as that of Amazon.

The acquisition of the online commerce company will introduce GSI's 180 customers to its marketplace channel, PayPal and BillMeLater services. Those customers include retailers such as Toys R Us and GNC as well as the Adidas and Levi's brands.

Donahoe said of the merge: "Technology is changing how consumers shop and retailers and brands are changing how they compete. With its complementary strengths, GSI will extend the power of our portfolio. With eBay, PayPal, GSI and our global platform capabilities we are focused on delivering new ways for retailers and brands of all sizes - from sole proprietors to large merchants - to drive innovation, engage customers and help people shop any time, anywhere and on any device."

The deal is expected to close in the third quarter of 2011 and is subject to GSI shareholder approval.

eBay will sell its licensed sports merchandise business and 70 per cent of its ShopRunner and Rue La La businesses are not core to its long-term strategy. Instead they will be sold to a new company led by GSI founder and chief executive Michael Rubin who is leaving GSI to head the new companies. He will be replaced by Chris Saridakis.

GSM Commerce, however, will be expected to function as a separate wing of business and will be managed by its old marketing-services business, Chris Sardakis. Both businesses, of course will move towards a common direction.

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