eBay Opens Wallet in Korea

The last bid is always the sweetest on eBay(EBAY Quote).

That's a lesson leveraged for tens of millions of dollars by minority investors in Internet Auction Co., the South Korean Internet site that eBay controls and tried to take private last year. The old offer was rebuffed as too low, a decision that proved prescient Tuesday when eBay nearly doubled it despite saying in December that it had no plans to return to the table.

Under the new deal, eBay will acquire roughly 3 million publicly traded shares in South Korea's biggest online auction site for Korean won worth roughly $108 a share. IAC's minority investors, who turned down a $59-a-share offer in December, currently include hedge funds Tiger Technology, Lone Pine Capital and Viking Global Investors.

Some of the terms of the transaction have changed since December 2003, when eBay owned 51% of the South Korean company and wanted to buy the rest for $377 million. In the deal announced last night, eBay -- which now controls 62% of Internet Auction -- agreed to spend $325 million to buy 23% of the company in block trades.

The purchases won't be made until the shares' market price comes into line with the takeout price, a quirk of South Korean securities law. eBay said it might buy more shares from other institutional owners in coming days and will tender for the rest of the company "in coming weeks."

In addition to its shareholders, who've watched the stock rise almost 60% in the last 12 months, eBay has been making a lot of people rich lately. Last month, it agreed to buy a minority interest in nine-year-old online classifieds service craigslist for an undisclosed sum. The site's founder, Craig Newmont, described the investor as "a guy who was working with me" when he incorporated the company in 1999.

Then, as now, eBay said the acquisition wouldn't change its 2004 guidance. In premarket Instinet trading, the stock was recently up 34 cents, or 0.4%, to $86.88.