Publish date:

eBay Snaps Ups German Auction Site

The takeover of alando.de may be the first of many overseas acquisitions.
Author:

On-line auctioneer

eBay

(EBAY) - Get eBay Inc. Report

may still be smarting over a systems crash that stalled trading of

Beanie Babies

, baseball cards and assorted cultural detritus two weeks ago. But with its successful purchase of a small German upstart, eBay is beginning to corner the market on global virtual garage sales.

On Tuesday, the San Jose-based company announced it had bought 3 1/2-month-old

alando.de

for an undisclosed sum. The acquisition gives eBay a dominant position in the splintered local market, where Germans place cyber bids for everything from

Roy Lichtenstein

prints to pedestrian

Star Wars

action figures.

Since its launch in March, alando has become Germany's leading auction site with around 50,000 customers offering and bidding on some 80,000 items. eBay, the world's largest Internet auctioneer, has more than 3.8 million registered users and over 2.2 million items, including 250 "I Want to Believe"

X-Files

posters, for auction.

TheStreet Recommends

eBay's Peaks and Valleys
Offline for an entire day and eBay's
shares are still up sharply year to date.

The transaction may force eBay to take a second-quarter charge and will likely cut into earnings for 1999. But the money will likely prove well spent. The local expertise provided by the Berlin-based alando staff would have been expensive for a U.S. company to secure on its own.

eBay's shares got a little lift from the news, although many Internet companies were riding a little higher on Wednesday. But its shares dipped 1 3/4 at the close to 146 7/16.

The assimilation of alando shouldn't present much of a problem, since the founders of the German site modeled themselves on eBay to begin with. "With only 15 employees, including the company's six founders, and a Web site noticeably similar to that of eBay's, we believe the integration process could prove to be quick and smooth," says Lauren Cooks Levitan, an analyst for

BancBoston Robertson Stephens

. The company maintains a market in eBay shares and helped underwrite the company.

alando's founders, all in their twenties, have wasted no time eagerly becoming part of the eBay team. Those without enough junk in their apartments can already access the site via

ebay.de

as well as the old alando URL. And soon, alando customers will have complete access to eBay's database of goods. eBay's international strength should help alando overwhelm other local auction sites run by

ricardo.de

and

Primus Online

, as well as stave off inroads by leading European auctioneer, the U.K.-based

Quixell

.

"We are pleased to offer the 10 million German Internet users a first-class service," said eBay founder Pierre Omidyar in a press release, signaling the company's desire to be a part of the Continent's largest online market. However, Omidyar also made it clear eBay isn't stopping in Germany. "With the takeover of alando.de, eBay is one step closer to its vision of a colorful, vibrant, loyal and global trading community."

E-auctioneering, system failures aside, is moving at cyber-speed. Four months ago alando.de didn't even exist. Now it is part of the world's largest online hammer holders. Assuming a quick digestion of its new German branch, eBay's next overseas takeover can't be very far off.