EBay Inc. is buying rapidly growing online ticket broker StubHub Inc. for $310 million in cash, further expanding the Internet auctioneer’s electronic bazaar.
The San Jose-based company announced the deal late Wednesday after the news had already been leaked to the media.
StubHub’s sale, expected to close before April, punctuates another improbable Internet success story.
San Francisco-based StubHub is the largest tickets-only reseller of tickets to sports, concerts and other events. The San Francisco Business Times, a publication affiliated with the Business Journal, ranked StubHub at No. 2 in its annual list of the Bay Area's fastest-growing private companies.
StubHub was founded in 2000 by CEO Jeff Fluhr and a fellow Stanford graduate student, Eric Baker. It charges users 25 percent in fees and commissions on all sales.
The Wall Street Journal quoted an unnamed source on Wednesday who said StubHub's earnings before interest, taxes, depreciation a nd amortization are roughly about $10 million, giving the deal a valuation of greater than 30 times cash flow.
StubHub said it generated about $100 million in sales in 2006 on $400 million gross ticket sales, bizjournals.com reports.
"StubHub’s business model is an excellent fit with eBay, a company we’ve admired for a long time," Fluhr said in a statement. "StubHub exists to serve passionate fans and we feel great knowing our customers will benefit from the power of eBay and its community of users."
EBay’s market value has plunged by nearly 50 percent, or $37 billion, over the past two years amid investor concerns about slowing growth in its online auctions, prodding management to expand through into other channels of electronic commerce.
Its recent acquisitions have included Internet phone service Skype and online price comparison service Shopping.com, neither of which have become as integral to eBay as its 2002 purchase of online payment service PayPal, the AP reports.
Prepared by Alexander Timoshik
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