UPDATE 3-EBay to buy German online club in European push

* Says deal to strengthen position in Europe

* Sees no impact of deal on 2011 financial results

* EBay shares down 1 percent
(Recasts, adds eBay comments, updates share movement)

By Nivedita Bhattacharjee

BANGALORE, Dec 20 (BestGrowthStock) – Web commerce company eBay Inc
(EBAY.O: ) marked its foray into online shopping clubs with an
offer to buy Germany’s brands4friends for about $200 million in
cash, to boost its presence in European fashion retail.

Online shopping clubs, which pool members to get group
discounts, are getting hotter as customers flock to the Web for
deals and discounts.

Amazon.com (AMZN.O: ) recently invested in online coupon
company LivingSocial, and Google Inc (Read more about Google Stock Analysis) (GOOG.O: ) had an
unsuccessful run at buying discount coupon provider Groupon.

Brands4friends, with about 3.5 million members, is
Germany’s largest online shopping club. It sells goods from
fashion and lifestyle brands including Buffalo, Calvin Klein
and Diesel at discounts of as much as 70 percent, according to
its website.

“EBay has focussed a lot on the fashion vertical … and
brands4friends is a great cornerstone in building that,”
Stephan Zoll, general manager for eBay in Germany, told

EBay estimated that online shopping clubs now make up 20
percent of Internet fashion sales in Europe.

The company has been investing heavily in its fashion
business, including opening eBay Outlet in the UK and Germany,
to let customers buy directly from fashion brands.

“So far, the (brands4friends) deal is focussed on Germany.
However, we can leverage the expertise that brands4friends has
in the shopping club area internationally,” Zoll said.

Analysts at Lazard Capital indicate the site is adding up
to 10,000 new members and selling up to 33,000 items each day.

“While the largest companies in the market remain
independent (for example, Vente-Privee and Gilt Group), there
is ongoing consolidation in the multi-billion dollar private
sale market,” they wrote in a note.

“We continue to view private sales as an attractive
secondary internet distribution channel for brands and

EBay does not expect the acquisition to have a material
impact on its 2011 financial results. The deal is expected to
close in the first quarter of 2011.

Last week, the company bought Critical Path Software, a
mobile software application developer that has been developing
its applications for Apple Inc (Read more about Apple stock future.)’s (AAPL.O: ) iPhone, which has
been downloaded more than 14 million times.

EBay’s three biggest markets are in the United States,
Germany and the UK. Germany accounted for $1.14 billion, or 13
percent, of its total net revenue in 2009.

But eBay warned in a U.S. regulatory filing earlier this
year that winning new shoppers in Germany, among other markets,
could become “more difficult and costly,” given how mature
e-commerce is there. EBay’s main competitors in Germany include
the e-commerce sites, Quelle and Otto.

As part of the agreement, eBay said it would assume
brands4friends’ stake in British shopping club SecretSales.com
and in Japan’s brands4friends.jp.

EBay shares were off a percent at $29.65 on Monday
afternoon on Nasdaq.
(Reporting by Nivedita Bhattacharjee in Bangalore and Phil
Wahba in New York. Additional reporting by Abhinav Sharma in
Bangalore; Editing by Greg Mahlich, Lisa Von Ahn, Roshni

UPDATE 3-EBay to buy German online club in European push