In its second-largest acquisition, Amazon buys the company for $970 million.
GMarket, a Korean e-shopping mall, filed for an IPO on June 6 in the U.S. Yahoo, meanwhile, committed to buying a 10% stake in the company.
One of South Korea’s largest online retailing companies is tying its future business success to Wall Street, and Yahoo has committed to buying a 10% stake in the company.
The company, GMarket Inc., filed for an initial public offering on June 6 with the Securities and Exchange Commission. The company hasn’t set terms for an IPO, but the transaction is being handled by Goldman Sachs International, Thomas Weisel and Cowen and Co.
GMarket, which receives more than 15 million unique visitors per month, operates a mass merchandise site with an inventory of 1.7 million SKUs in 27 product categories.
In 2005 GMarket reported net income of $5.4 million on total revenue of $91 million. For the first quarter of 2006, the company reported net income of $2 million on revenue of $29.1 million, which includes the sale of merchandise and advertising fees.
Yahoo has entered into an agreement to buy a stake of approximately 10% in Gmarket from Oak Investment Partners, currently the only major outside institutional investor in Gmarket, Yahoo said this week. “Gmarket’s strength in e-commerce complements the strong offerings we already provide in the Korean market across communications, content and search through Yahoo Korea and Overture Korea,” said Dan Rosensweig, COO of Yahoo. “We look forward to working with Gmarket to leverage their e-commerce expertise to further expand Yahoo’s leading position in commerce in Asia.”
Nakyang Seong, head of Yahoo Korea, added: “Upon completion of the investment, Yahoo Korea and Gmarket will actively cooperate to pursue broader opportunities in the Korean market.”
In South Korea, GMarket competes directly with Auction.co.kr, an auction-based web site operated by Internet Auction Co. Ltd., a subsidiary of eBay Inc., and Onket.com, an e-commerce marketplace operated by Daum Corp., one of the leading Internet portals in Korea. GMarket also competes against other online retailers, such as Interpark Corp., which operates Interpark.com, and GS Home Shopping, and retailing web sites, including Lotte.com, Shinsegae.com, Hmall.com, Naver.com and Nate.com.
In its S1 filing, GMarket says it will use the proceeds to grow its business in South Korea, an e-commerce market with 25.4 broadband subscribers per 100 inhabitants and 33 million total Internet users, which represent 68.4% of Korea’s total population. “The evolution of the retail e-commerce industry in Korea is similar to that in the United States,” the company says in its S1 papers. “We believe the Internet offers the opportunity to provide an alternative sales and marketing channel for sellers to reach a large number of buyers at a relatively low cost and without maintaining a physical store.”
GMarket anticipates that being a publicly traded company in U.S. will help to grow its base in South Korea. The company isn’t saying if it expects to compete in the U.S. online retailing market.