GSI going... going... sold to eBay for $2.4 bn

The San Jose-based auctioneer announced Monday that it agreed to acquire online marketing services company GSI Commerce in a deal worth $2.4 billion.

King of Prussia, Penn.-based GSI is being acquired for $29.25 a share, a 51 percent premium over the stock's closing price Friday. The deal will be financed with cash and debt, eBay said.

Dewey & LeBoeuf is advising longtime client eBay on the transaction, with Silicon Valley M&A partner Keith Flaum once again taking the lead. Flaum previously advised the company on its $2.75 billion sale of Skype, in 2009, as well as on last year's $200 million purchase of German online shopping company brands4friends.

Joining Flaum were M&A partners Jane Ross and Rick Climan; corporate partner David Smith; technology transactions partners Eric Reifschneider and Robert Finkel and counsel Spencer Wood; tax partner Art Hazlitt; finance partner Greg Owens and counsel Patti Marks; and employment partner Mitch Pahl.

Michael Jacobson is eBay's general counsel.

Several firms advised GSI on the deal. Philadelphia-based business and finance partner Richard Aldridge led a team at Morgan, Lewis & Bockius. Aldridge was assisted by business and finance partners Justin Chairman and Howard Kenny; IP partners Louis Beardell, Kenneth Davis, and Ron Dreben; employee benefits senior counsel Joseph Ronan and partner Amy Kelly; tax partner Paul Gordon; antitrust partner Harry Robins; and litigation partner Robert Gooding. GSI vice president and general counsel, Arthur Miller, served as the primary in-house attorney for the company.

Last year, Aldridge led a Morgan Lewis team advising GSI on its purchase of sports merchandise retailer Fanatics, Inc., for $277 million.

Davis Polk & Wardwell is serving as counsel to the special committee of the board of GSI, with a team that included Menlo Park, California, corporate partners Daniel Kelly Jr. and Julia Cowles, along with litigation partner Dennis Glazer, and tax partner Rachel Kleinberg.

According to spokespeople at two firms involved with the deal, Sullivan & Cromwell is legal adviser to GSI founder and CEO Michael Rubin. Palo Alto-based corporate governance partner John Savva led his firm's team. As of the time of this post, Sullivan & Cromwell could not confirm its role in the transaction.

Morgan Stanley, financial adviser to GSI on the transaction, is being advised by Weil, Gotshal & Manges. That firm's team was led by corporate partner Michael Aiello.

EBay plans to divest GSI's licensed sports merchandise business, as well as 70 percent of social shopping website Rue La La and ShopRunner because they are not in line with the company's "long-term growth strategy," eBay said in a press release. The assets will be sold and placed in a new holding company that will be led by Rubin.

With the agreement signed, there will now be a 40-day period during which GSI will field rival bids. The deal, which also is subject to regulatory and GSI shareholder approval, is expected to close in the third quarter.

(Published by The Am Law Daily - March 28, 2011)