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.
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.