eBay agreed to acquire the technology and assets of former competitor FairMarket Inc. for $4.5 million in cash. FairMarket also said it would announce a cash distribution of approximately $38 million to its stockholders after the closing.
FairMarket was founded in 1997 and provided auction technology to Web sites like Dell Computer and Microsoft. Many companies realized they could sell products directly on eBay, which had much more traffic than they could bring to auctions on their own sites. FairMarket shifted strategies and became a provider of auction management services to sellers on eBay and other auction sites.
Last year, FairMarket entered into an exclusive agreement with eBay to run its loyalty marketing programs. FairMarket's first foray into rewards program was for Burger King, which ran a pilot program for several months. Burger King customers in Erie, Pennsylvania, and Albany, New York, earned points that they could deposit and track on a co-branded Burger King and eBay site. FairMarket said the program was a success, but it was terminated when Burger King was acquired.
FairMarket is working on other loyalty programs for clients including Kellogg (KelloggKash.com), Dr Pepper/Seven Up Inc. and Warner Bros. Records Inc. (LiquidLoot.com), H.J. Heinz (BagelBites.com), American Express, and in the U.K, De Vere Group and the Bertlesman Group. FairMarket also works with a wide variety of advertising agencies and partners to deliver client programs including Digitas, Draft Worldwide, Carlson Marketing Group, Euro RSCG Circle, Think 360and VML.
The acquisition is expected to close in the third quarter of 2003 and is subject to stockholder approval. eBay expects to hire certain members of the FairMarket team.
