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eBay’s Next Spin-Off Is Its Enterprise Unit

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eBay is selling its Enterprise division for $925 million

After dealing with PayPal (PYPL), eBay (EBAY) is moving to its next spin-off—its Enterprise unit. For quite some time, eBay had been looking to sell its Enterprise business. It announced a deal a few minutes before the earnings call.

eBay sold its Enterprise business for $925 million to a consortium that consists of Sterling Partners, Longview Asset Management, and Innotrac Corporation—a Sterling Partners portfolio company—along with companies owned by the Permira Funds. The deal is expected to close in 2H15.

John Donahoe was eBay’s president and CEO until July 2015. During the 4Q14 earnings call, he emphasized the company’s focus on both eBay Marketplaces and eBay Enterprise business. He mentioned that “It’s clear that the two businesses have increasingly divergent opportunities.”

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eBay Enterprise’s growth rose 

As you can see in the above chart, eBay Enterprise’s revenue didn’t grow much in earlier quarters. eBay Enterprise helps traditional retailers develop and maintain online shopping sites. It also provides a variety of services like marketing, customer care, and payments processing to these clients. Some of its clients are IKEA, iRobot (IRBT), Dick’s Sporting Goods (DKS), and RadioShack.

One of the highly successful services was the eBay Deals. Customers are opting for more deals on eBay Deals for a variety of reasons. Here are just a few:

  • convenience and ease in ordering
  • reputable and experienced sellers
  • fast and free shipping
  • low prices

This massive growth of eBay Deals puts competitive pressure on eBay’s peer Groupon (GRPN). Groupon is a deal-of-the-day website that features discounted gift certificates that consumers can use at local or national companies.

For diversified exposure to eBay, investors can consider ETFs like the SPDR S&P 500 (SPY). This ETF invests in the 500 largest US companies. The technology sector accounts for 18% of the fund’s portfolio.

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