eBay 2009 Annual Report Download - page 104

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
a cash tender offer resulting in a total cash purchase price of approximately $1.2 billion and assumed Gmarket
outstanding stock options. Subsequent to the acquisition date, we acquired additional securities related to the
noncontrolling interest. As of December 31, 2009, we owned approximately 99.99% of the outstanding securities
of Gmarket. Gmarket is a retail ecommerce marketplace in Korea, and is included in our Marketplaces segment.
The rationale for acquiring Gmarket was to strengthen our ecommerce business in Korea and provide a platform
for expansion throughout Asia.
The fair value of Gmarket’s stock options assumed was determined using the Black-Scholes model. The fair
value of the non-controlling interest was determined based on the number of shares held by minority
securityholders multiplied by the offer price of $24 per security. The following table summarizes the
consideration paid for Gmarket (in thousands):
Cash ........................................... $1,209,433
Assumed stock options ............................ 5,361
Fair value of total consideration ..................... 1,214,794
Fair value of non-controlling interest ................. 12,174
Total .......................................... $1,226,968
The purchase price was allocated to the tangible assets and intangible assets acquired and liabilities assumed
based on their estimated fair values on the acquisition date, with the remaining unallocated purchase price
recorded as goodwill. The fair value assigned to identifiable intangible assets acquired has been determined
primarily by using the income approach and variation of the income approach known as the profit allocation
method, which discounts expected future cash flows to present value using estimates and assumptions
determined by management. Purchased identifiable intangible assets are amortized on a straight-line basis over
their respective useful lives. Our preliminary allocation of the purchase price is summarized in the table below
(in thousands):
Net tangible assets acquired ........................ $ 50,526
Goodwill ....................................... 797,946
Trade name ..................................... 264,604
User base ....................................... 76,512
Developed technology ............................. 33,076
Other intangible assets ............................ 4,304
Total .......................................... $1,226,968
Our estimated useful life of the identifiable intangible assets acquired is three years for developed
technology, five years for the trade name and user base and one year for other intangibles. The allocation of the
purchase price for the acquisition has been prepared on a preliminary basis and changes to that allocation may
occur as additional information becomes available.
Gmarket’s financial results have been included in our consolidated statement of income as of June 16, 2009.
The amount of Gmarket revenue and earnings included in our consolidated income statement for 2009 was not
material. The noncontrolling ownership interest in Gmarket is included in additional paid in capital in our
consolidated balance sheet. Earnings attributable to noncontrolling interests for 2009 were not significant. The
results of operations of Gmarket for periods prior to our acquisition of Gmarket were not material to our results
of operations, and accordingly, pro forma results of operations have not been presented.
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