EBay Settles Investor Suits Over GSI Commerce Purchase
Stock Chart for GSI Commerce Inc (GSIC)
(Corrects total amount of settlement in first paragraph.)
EBay Inc. (EBAY), owner of the largest e- commerce market, agreed to pay about $24 million to resolve investor lawsuits over its $2.4 billion acquisition of online marketing firm GSI Commerce Inc.
GSI shareholders will receive 33 cents a share in addition to EBay’s $29.25-a-share offer under the settlement, the companies said today in a statement. Investors will get the settlement money when the acquisition closes, which is expected on June 17, the companies said.
EBay Chief Executive Officer John Donahoe, two years into a three-year campaign to revive sales growth amid competition from Amazon.com Inc., said GSI will help him better connect buyers and sellers when he announced the transaction in March. GSI, based in King of Prussia, Pennsylvania, has long-term commerce- services relationships with retailers and brands, EBay said.
GSI provides e-commerce and marketing services to over 2,000 brands such as Toys “R” Us, the National Football League and Polo Ralph Lauren, according to court filings.
As part of the transaction, EBay will divest all of GSI’s licensed sports-merchandise business, which provides e-commerce operations for all the major U.S. sports including the NFL, and 70 percent of online-retail sites Rue La La and ShopRunner, court papers show.
EBay officials said they were selling those assets to NRG Commerce LLC, a company set up by GSI Chief Executive Officer Michael Rubin, because they aren’t part of its core long-term growth strategy.
Some GSI shareholders, including the Erie County Employees Retirement system, a pension fund, and the Southeastern Pennsylvania Transportation Authority, which operates trains and buses in the Philadelphia area, filed suit in Delaware Chancery Court earlier this year to challenge the buyout.
Disgruntled GSI investors contend the company’s board sold the marketing firm too cheaply and loaded the deal with terms that favored EBay’s bid.
GSI shareholders were set to ask Judge John Noble to block the deal at a hearing on Friday. The hearing was canceled without explanation. Noble still must decide whether to give final approval to the settlement.
GSI rose 26 cents, or almost 1 percent, to $29.54 at 4:29 p.m. New York time in Nasdaq Stock Market trading. The stock soared 51 percent on March 28, the day EBay announced the takeover. EBay, based in San Jose, California, fell 10 cents to $29.86 in Nasdaq trading.
The case is In RE GSI Commerce Inc. (GSIC) Shareholder Litigation, CA 6346, Delaware Chancery Court (Wilmington).
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