EBay to buy its way into Asia

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EBay, in a business move giving it an Asian presence, has purchased a majority of shares in a Korean online auction company

by Jennifer Couzin

(IDG) -- In an aggressive move designed to give it a beachhead in Asia, eBay announced Monday that it has purchased a majority stake in Internet Auction, the leading Korean online auction company.

EBay agreed to buy just over 50 percent of the company's shares for $120 million in cash.

The acquisition "could ultimately serve as a platform to attack some of the smaller companies in Asia," eBay CEO Meg Whitman said in a conference call. EBay already operates a Japanese site.

According to an eBay executive, Internet Auction has 2.8 million users, very few of them also buying on eBay. Internet Auction features a person-to-person trading system, a business-to-consumer section and a business-to-business section. The Korean company charges sellers fees of about 6 percent for person-to-person auctions, 7 percent for b-to-c auctions and 2 percent for b-to-b auctions. It also charges a small listing fee of about 15 cents per auction.

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Internet Auction also has a small fixed-price business in which individuals post items for sale and there is no bidding, a service that resembles the quickly growing Half.com, a company that eBay purchased last year. Whitman noted that eBay plans to "nurture" the company's fixed-price buying and selling platform.

Whereas eBay's early efforts focused on sales of trinkets and collectibles, Internet Auction focused more on practical consumer items following its launch. In addition, Internet Auction operates a small auto-auction category similar to the one on eBay, though Whitman acknowledges that Internet Auction's auto area is "not well-developed."

EBay says it hopes the Korean company will have a positive cash flow by the end of the year.

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