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Intercontinental Exchange (ICE), the parent of the New York Stock Exchange (NYSE), spent much of last week justifying why a potential acquisition of eBay would make sense, before abandoning the pursuit.
News of a potential deal was reported by The Wall Street Journal on Tuesday. The deal wouldn't have included the classifieds unit, which eBay has been looking to sell.
The news sent eBay’s shares up and ICE’s down as Wall Street was baffled finding a rationale.
On Tuesday, ICE issued a statement that eBay hadn’t engaged “in a meaningful way” and negotiations were not ongoing, while stating that ICE "does look to explore potential opportunities that it expects will deliver enhanced shareholder value, and will continue to do so in the future."
On ICE's fourth-quarter conference call Thursday morning, CEO Jeff Sprecher strongly defended the potential tie-up.
“We’re not crazy. We didn’t lose our minds,” Mr. Sprecher said. “We know what our platform does and we know how to lever it. And we feel really good about our ability to continue to find new asset classes.”
Exchanges are looking to diversify away from listing and trading traditional financial instruments to support marketplaces for an array of digital assets, ranging from cryptocurrencies to airline miles to digital gaming assets.
Mr. Sprecher saw "more synergies and characteristics" between an online auction site and a securities marketplace in the way data is collected and organized versus an e-commerce platform. The CEO said eBay “should be viewed as a 25-year old cash market for collectible goods, which looks a lot more like the New York Stock Exchange than Amazon."
ICE would consider deals for large, complex companies that could be “reinvigorated” by its larger platform or smaller ones that could see accelerated growth.
By late Thursday, ICE said it would cease exploring opportunities with eBay based on investor concerns.
The interest comes as eBay continues to seek a new CEO following the exit of Devin Wenig last September. EBay is also facing pressures from activist shareholders and competitors, from Amazon to emerging marketplaces such as Etsy, RealReal, Mercari and Poshmark.
- Intercontinental Exchange Statement On News Reports Suggesting Possible Transaction With Ebay – Intercontinental Exchange
- Intercontinental Exchange Statement Regarding Management’s Q4 Conference Call With Investors – Intercontinental Exchange
- Intercontinental Exchange Reports Fourth Quarter & Full Year 2019 – Intercontinental Exchange
- Intercontinental Exchange Inc. (ICE) Q4 2019 Earnings Call Transcript – The Motley Fool
- NYSE Owner Abandons Potential eBay Deal – The Wall Street Journal
- NYSE Owner Intercontinental Exchange Makes Takeover Offer for eBay – The Wall Street Journal
- ‘We Didn’t Lose Our Minds.’ Intercontinental Exchange’s CEO Explains the eBay Deal That Wall Street Hates. – Barron’s
- eBay is more like the NYSE than Amazon, says Intercontinental Exchange CEO – CNBC
- EBay needs a turnaround, but analysts wonder whether NYSE operator has the goods – S&P Global
- EBay Downgraded at Wells Fargo as Competition From Amazon, Multichannel Retailers Mounts – TheStreet