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The acquisitions of eBay, Paypal and other digital companies

eBay and Paypal have stood out for their acquisitions among the main digital multinational companies, according to an UNCTAD report.

In particular, digital multinational companies from the United States represented 53% of all deals, and in more than half of the cases (53%) they went to companies from European countries, especially the United Kingdom (23%).

In developing economies, US MNCs approached India in 8% of deals, mostly buying minority stakes to gain market access and local innovative solutions.

For example, eBay (US), along with Microsoft (US) and Tencent (China), acquired an undisclosed minority stake in online retailer Flipkart (India), for $1.4 billion in 2017.

Similarly, Paypal (United States) acquired undisclosed minority stakes in a variety of Indian companies in various industries, including software providers, online brokerage systems, professional services, and electronic payments (Moshpit Technologies, Speckle Internet Solutions, Scalend Technologies, Freecharge Payment Technologies).

eBay

For the many startups in this year’s Top 100 Digital MNCs ranking, their investment profile differs from that of well-established MNCs.

Already the large digital multinational companies are dominant players globally, and their investment decisions are primarily motivated by the need to protect the business and secure the next innovation, rather than to reach foreign customers.

The top 10 multinationals by assets in the ranking account for a fifth of transactions (and almost half of greenfield projects) mainly in innovative start-ups in other developed economies or segments of their supply chain (ICT and infrastructure).

More than 80% of foreign capital acquisitions of digital multinational companies are made in other developed economies, and European companies are the target of almost half (48%) of all deals.

Among developing economies, digital MNCs targeted Indian companies in a sizeable share of deals (7%), due to its thriving tech startup scene.

For their part, European digital companies (of which there are 22 in the ranking) accounted for a quarter of foreign capital acquisition agreements, of which more than half were made in other European countries (54%), in looking for opportunities to consolidate operations with competitors.

Another fourth was in the United States. An example of the first type of deal is the 2020 merger of two delivery companies, Takeaway (Netherlands) and Just Eat (UK), a deal valued at $8 billion.

Music streaming company Spotify (Luxembourg) was one of the most active buyers in the United States, where its acquisitions included software and internet services companies Podz and Betty Labs (for undisclosed value) in 2021.

China

The four Chinese companies in the ranking accounted for 11% of deals and invested a relatively larger share in multinational companies from developing economies (34%) than their developed counterparts.

The only majority acquisition was the purchase by Alibaba (China) of the electronic commerce company Lazada (Singapore) -which has been taking place in several tranches with one pending- for a total of 4,000 million dollars.

 

Redacción Opportimes

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