eBay Agrees to Cut Stake in Adevinta to Win Unit Sale Approval; Stock Falls 3%

eBay (EBAY) has agreed to reduce its stake in Adevinta to clear the regulatory hurdle that has held up the completion of the sale of its Classifieds unit. eBay stock fell 3.17% on Friday to close at $63.26.

In July 2020, eBay announced a deal to sell its Classifieds business to Adevinta for about $9.2 billion. It was set to receive payment for the unit sale in the form of cash and stock. The cash component of the deal was $2.5 billion, and for the stock part, eBay was to receive 540 million shares of Adevinta, representing a 44% stake.

However, the deal got stuck in Austria, and eBay and Adevinta had to make certain concessions to secure its approval, including eBay agreeing to reduce its stake in Adevinta to at least 33%. eBay will have 18 months to do that following the closing of the Classifieds sale.

“Additionally, Adevinta has agreed to prevent the flow of information about Willhaben to eBay, as well as to restrict eBay’s potential influence over the strategic operations of Willhaben,” Adevinta said in a statement. Willhaben is Adevinta’s joint venture in Austria.

With Austrian competition authorities accepting the proposed remedies, eBay and Adevinta expect to close the Classifieds sale transaction on June 25 or thereabouts. (See eBay stock chart on TipRanks).

Baird analyst Colin Sebastian recently reiterated a Buy rating with a price target of $65 on eBay stock. Sebastian’s price target suggests 2.75% upside potential. The analyst notes that eBay’s volumes appear to be ahead of 2019 levels and tracking in line with second-quarter expectations.

Consensus among analysts is a Moderate Buy based on 8 Buys and 10 Holds. The average EBAY analyst price target of $70.44 implies 11.35% upside potential to current levels.