eBay Completes PayPal Acquisition
SAN JOSE, Calif., Oct 3, 2002 -- eBay Inc., the world's online marketplace (Nasdaq:EBAY) (www.ebay.com), today completed its previously announced acquisition of PayPal, Inc. (Nasdaq:PYPL) (www.paypal.com), the global payments platform. At today's meeting of PayPal stockholders, the transaction was approved by holders of approximately 65% of the outstanding shares of PayPal common stock representing more than 99% of the shares voting.
In addition, Peter Thiel announced today that he has resigned as PayPal's CEO. Matt Bannick, eBay's senior vice president, global online payments, will assume all of Thiel's responsibilities.
In accordance with the terms of the transaction as announced on July 8, 2002, eBay acquired all of the outstanding shares of PayPal in a tax-free, stock-for-stock transaction using a fixed exchange ratio of 0.39 of an eBay share for each PayPal share. Based on eBay's average closing stock price over the period two days before and after the acquisition was announced, the transaction is valued at approximately $1.5 billion. According to current estimates, the recognized purchase price is also expected to include approximately $17 million for acquisition-related costs.
As the company previously announced, PayPal will continue to operate as an independent brand. eBay's current payment service, eBay Payments by Billpoint, will complete the phase-out of its operations in the first half of 2003. PayPal's gaming business will be phased out by the end of 2002.
Fourth Quarter 2002 Financial Impact
Based on eBay's current expectations, including the phase out of PayPal's gaming business, eBay expects that PayPal will incrementally contribute $60 to $64 million in net revenues in the fourth quarter of 2002. Beginning with financial results for the fourth quarter of 2002, eBay will report Payments as a separate segment. This segment will include PayPal's operating results as well as those of Billpoint until the phase-out of Billpoint operations is complete. Based on current integration plans, Billpoint is expected to generate approximately $6 million in revenues in the fourth quarter of 2002.
eBay expects that the acquisition will incrementally contribute approximately $6 million to eBay's consolidated pro forma net income for the fourth quarter of 2002. As previously indicated, on a GAAP earnings per share (EPS) basis, including approximately $14 million in charges for amortization of intangible assets and stock-based compensation, eBay continues to expect the transaction to be dilutive.
2003 Financial Impact
For the full year 2003, eBay currently expects that net revenues for the Payments segment will be approximately $300 to $310 million which includes net revenues from Billpoint. On a consolidated basis, eBay now expects that net revenues in 2003 will be between $1.77 billion and $1.83 billion. In addition, eBay continues to believe that for the full year 2003, the acquisition will be slightly accretive to pro forma EPS, and will be dilutive to GAAP EPS.
ABOUT PAYPAL
PayPal enables any business or consumer with email to send and receive Internet payments securely, conveniently and cost-effectively. PayPal's network builds on the existing financial infrastructure of bank accounts and credit cards to create a global payment system. Based in Mountain View, California, PayPal is available to users in 38 countries including the United States.About Sequoia Capital
Sequoia Capital provides venture capital funding to founders of startups who want to turn business ideas into companies. As the "Entrepreneurs Behind the Entrepreneurs", Sequoia Capital's Partners have worked with innovators such as Steve Jobs of Apple Computer, Larry Ellison of Oracle, Bob Swanson of Linear Technology, Sandy Lerner and Len Bozack of Cisco Systems, Dan Warmenhoven of Network Appliance, Jerry Yang and David Filo of Yahoo!, Jen-Hsun Huang of nVIDIA, Michael Marks of Flextronics, Larry Page and Sergey Brin of Google, Chad Hurley and Steve Chen of YouTube and Dominic Orr and Keerti Melkote of Aruba Wireless Networks. To learn more about Sequoia Capital visit www.sequoiacap.com.
Contact:
Michael Moritz
SEQUOIA CAPITAL
moritz@sequoiacap.com
