EBay and Adevinta will sell some of their U.K. marketplace assets to appease the country’s Competition and Markets Authority (CMA) and keep the $9.2 billion deal between the two companies on course.

To remedy concerns brought up by the U.K. regulator in mid-February, the two companies have proposed the sale of their individual marketplace assets in the country. Adevinta will sell Shpock, a transactional marketplace, while EBay Classifieds Group will sell Motors.co.uk and Gumtree.com, a general classifieds site.

“The U.K. Competition and Markets Authority (CMA) has announced that it considers there are reasonable grounds to believe that the remedies presented by Adevinta and EBay address their concerns,” the companies said in a joint statement.

The CMA will make a decision on whether those asset sales are enough to secure its approval by April 29. The regulator could also postpone the decision until June 28.

In 2019, EBay Classifieds’ U.K. business accounted for less than 10% of its consolidated revenues. Adevinta’s U.K. business accounted for 1% of its consolidated revenues. On a combined basis, the U.K. would represent less than 5% of total consolidated revenues of the two companies.

The companies said on Tuesday that they aim to close the transaction in the second quarter of 2021, subject to final ratification of the plan by the CMA and regulatory approval in Austria.

Shpock to be sold first, then Gumtree / Motors after merger completed

As the AIM Group understands it, Adevinta will have to sell Shpock first (for context: a transaction agreement with a buyer approved by the CMA), before the Adevinta / EBay Classifieds Group merger can close. Once that transaction is completed and EBay Classifieds assets have been transferred to Adevinta, the Oslo-listed company would then look to sell Gumtree U.K., which also includes Motors.co.uk, to the same buyer as the two companies are viewed as a single entity.

It’s unlikely that the same buyer will be able to purchase both Gumtree.com / Motors.co.uk and Shpock, as that will then create additional complications over competitive standards as viewed by the CMA originally.

Despite initial reports, Shpock assets will not be wound down in Germany and Austria. Instead, Adevinta will let the future buyer decide on where to take these markets.

Potential buyers

The three entities up for sale are all very different:

  • Gumtree.co.uk is the No. 1 horizontal in the U.K. by visits, with 35 million total monthly visits in January, according to SimilarWeb. The site saw £66.2 million in revenue in 2019, the latest available figures. While it has a dominant position by visits (though low on a per-population basis by the standards of leading European horizontal marketplaces), the Gumtree business has not been able to build dominance in any vertical category and has no genuine transactions-led component.
  • Motors.co.uk is the No. 3 automotive marketplace in the U.K. by visits. It’s behind both the market leader Auto Trader and CarGurus, the distant No. 2. It had revenue of £17.9 million in 2019.
  • Shpock is a transactions-led marketplace, with the U.K. its primary focus of operations and earnings. In 2018, the last year it posted financial results, Shpock turned over €9.9 million in revenue across all its territories.

A buyer for the Gumtree / Motors.co.uk business might be interested in consolidating the autos space and creating a stronger competitor to Auto Trader / other players in the market. However, the most likely consolidators, which are inherently vertical businesses like CarGurus and HeyCar, may not want the horizontal Gumtree, which potentially complicates the development of a focused autos play.

With Gumtree and Shpock sold separately, it may be possible consolidate them under a single brand in order to create a more transactional web and app competitor to EBay and Facebook. Sold on its own, Shpock may be most interesting to a mobile-led c-to-c transactions marketplace that’s looking to enter the U.K. market. Spain-based Wallapop, for example, may be interested in bringing its transactions model to the U.K.

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