E-commerce giant eBay is nearing a $900 million (£580 million) deal for its enterprise unit with a group led by private-equity firm Permira. The deal has been in the works for a few months, with eBay looking to tie loose ends before splitting with PayPal.
The news comes just days before eBay intends to reveal its second quarter financial results, which will include the split from PayPal. The company has been pressured to lower the volume of things on its portfolio by activist investor Carl Icahn, amongst others.
eBay Enterprise accounted for seven per cent of all revenue in the first quarter this year. It is set to lose one of its biggest clients, Toys ‘R’ Us, in 2016, following an announcement by the toy store that it will use its own in-house retail site.
The group acquiring eBay Enterprise includes Sterling Partners, and may rise up to $925 million (£590 million). Previous suitors included Thomas H. Lee Partners, who planned to pay up to $1 billion (£640 million) for the division.
eBay acquired the enterprise unit in 2011 from GSI Commerce for $2.4 billion (£1.5 billion) but it looks like the investment was not worth it. The enterprise unit never flourished, possibly due to eBay’s lack of real investment in new and innovative marketing, promotion and payment solutions compared to competitors.
The eBay-PayPal split allows PayPal to finally be free from the clutches of eBay. Investors are hoping to see PayPal pursue new deals with customers, alongside develop new payment tools for businesses and customers.
It is not the only big split happening in Silicon Valley, with HP announcing it will split the business into two parts: a corporate hardware and services side, and a computer and printer side.
Splitting a business allows investors to keep stock in the division it believes will succeed, instead of having to investor in a large company with a lot of loose ends.