Is EBay Inc (NASDAQ:EBAY) Desperate?
EBay Inc (NASDAQ:EBAY) owns PayPal, the globally popular electronic-payment system. The company said that it will acquire Braintree for $800m in cash as it wants to widen the scope of its mobile-transactions business. Braintree is a global payments-platform. It works exclusively with mobile specific and online startups such as Airbnb, the room rental service and OpenTable Inc, the internet based restaurant reservation company. In a statement, EBay Inc (NASDAQ:EBAY) said that the Chicago-based Braintree will operate as a Paypal unit.
Paypal is one of EBay Inc (NASDAQ:EBAY)’s fastest-growing businesses and it is venturing beyond the online goods-sales payment processing space and moving into the physical-stores domain as well as some other areas. Over the last few years, a large number of startups have entered the payments industry.
The target area is mobile payments and even massive tech companies like Google are vying for their share of this growing and lucrative business. As a larger number of consumers prefer to make purchases via online stores, ecommerce is a booming industry that has unlimited potential.
John Donahoe, EBay Inc (NASDAQ:EBAY)’s Chief Executive Officer said that the company has made large investments in mobile over the last few years and this acquisition fit in very naturally into that framework. He added that PayPal and Braintree have been working with each other for over a year now and that the acquisition talks had commenced around 6 weeks ago and finally took shape over the last month.
In Thursday’s trading, EBay Inc (NASDAQ:EBAY) rose by 4.48%. The opening price of the shares was $54.63 which climbed to an intraday high of $56.90 and dropped to a close of $56.64. Approximately 13.91 million shares were traded on Thursday and an average volume of 8.73 million shares was traded over a 30 day period. EBay Inc (NASDAQ:EBAY) has a market capitalization of 73.32 billion.