eBay to Reduce Stake in Adevinta to 34%

eBay (EBAY) has reached an agreement to sell part of its ownership stake in Adevinta to Permira. The company is to sell 125 million Adevinta shares for $2.25 billion as part of the transaction. Additionally, eBay has granted Permira a 30-day option to purchase an additional 10 million shares worth $180 million.

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The selling price represents a 7% discount to Adevinta’s 10-day volume-weighted average price as of July 12. The sale will reduce eBay’s holdings in Adevinta to 34% from 44%. The purchase of the additional 10 million shares will reduce eBay’s holdings in Adevinta to 33%. The transaction is subject to regulatory approvals and is expected to close in the fourth quarter.

eBay is offloading its stake in Adevinta after reaching an agreement with Austrian regulators. The sale was one of the requirements for the U.S. company securing a much-needed regulatory green light for the sale of eBay Classifieds Group to Adevinta. (See eBay stock charts on TipRanks)

“The transaction announced today with Permira provides a clear path to satisfying this commitment, while delivering value to eBay shareholders and introducing an experienced, world-class growth investor to Adevinta’s shareholder base,” eBay said in a press release.

Recently, Piper Sandler analyst Thomas Champion reiterated a Buy rating on eBay but raised his price target to $81 from $71, implying 19.07% upside potential to current levels. The upgrade is in response to the e-commerce company increasing its share repurchase program and announcing the close of the sale of Classifieds to Adevinta.

“Post transactions, Ebay’s non-core divestiture process looks complete. The business should be much simpler to operate. Also, beyond the $2BN in recent after-tax cash proceeds, the company will likely receive $5BN+ in additional cash over the next 18 months (likely for buybacks),” said Champion.

Consensus among analysts is a Moderate Buy based on 7 Buys and 9 Holds. The average eBay price target of $71.29 implies 4.79% upside potential to current levels.

EBAY scores a 5 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.