eBay To Be Acquired By Alibaba (BABA)?

Re/Code recently made a list of potential acquisitions for 2015, and one of the most notable predictions is Alibaba buying up eBay.

Back in September, Alibaba enjoyed the biggest IPO ever and now is ready to make some big moves. Since eBay and PayPal are finally separating ways, this would present a terrific opportunity for an eBay acquisition. The e-commerce industry in particular enjoys speculating about a possible Alibaba-eBay acquisition. Since the former is flushed with a $236 billion market value, it wouldn’t be surprising if the company wants to buy the U.S. based e-tailer.

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Possible eBay acquisition by Alibaba could compete better with Amazon

Right now Alibaba has no presence in the United States, and a merger with eBay would give the company instant access to this key market. Together, the companies just may prove to be a formidable force against Amazon, another larger e-tailer which dominates the online retail market. One important thing Alibaba and eBay have in common that gives both companies a huge advantage over Amazon is the lack of competition. The two former companies serve as a hub for smaller companies and individual sellers to market goods. The latter sells its own items and serves as a market hub for other sellers. Amazon competes with its sellers, but Alibaba and eBay don’t.

The battle for eBay

When eBay initially announced plans to spin off PayPal as a separate business, the company’s current CEO John Donahoe summed it up with, “We’re not doing this to set either business up for sale. Post-separation, if you use current valuations, you’ll have two very significant companies with market caps well above $30 billion each.”

Investor Carl Icahn has something else in mind. He shared his thoughts in a note which summed up his reasoning why PayPal needs to either merge or be swallowed up by another company to reach its full potential.