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Google (GOOG)/eBay (EBAY) Deal 'Unlikely' Says Piper Jaffray's Munster

September 15, 2014 7:01 AM EDT
Get Alerts EBAY Hot Sheet
Price: $51.35 -1.63%

Rating Summary:
    17 Buy, 29 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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Piper Jaffray analyst Gene Munster weighed in on eBay (NASDAQ: EBAY) following reports on Friday that Google (NASDAQ: GOOG) (NASDAQ: GOOGL) is in talks to buy a stake in the company. The analyst views the reports as largely unsubstantiated and said a deal between the two is unlikely.

Munster notes that while Google has shown a willingness to make big bets (DoubleClick, YouTube, Motorola), he views it as unlikely that Google would want to buy all of or take a stake in eBay. He notes that Google would want to buy all of or take a stake in eBay and believes Google’s general philosophy tends to emphasize full ownership in key asset.

If Google were to buy a stake in eBay, Munster believes the target would specifically be influence over PayPal, particularly given Apple’s unique Apple Pay feature on the iPhone 6.

Munster said what might be more attractive for Google is a full acquisition of PayPal, making it instantly the leader in online payments. "Historically eBay has resisted activist investors (e.g. Carl Icahn) who have proposed spinning off PayPal and has stated that data sharing (which improves risk algorithms for PayPal) and other synergies make keeping PayPal under the eBay Inc. umbrella a better near-term decision," Munster commented. "In August, however, speculation surfaced that PayPal CEO candidates were being told or were given hints that PayPal would be a separate entity as early as 2015. We believe in the wake of the Apple Pay announcement that an IPO spin-off is less likely; if eBay is still pursuing the idea of divesting PayPal it may be looking to other alternatives."

Munster maintained a Neutral rating and price target of $55 on EBAY.

For an analyst ratings summary and ratings history on eBay click here. For more ratings news on eBay click here.

Shares of eBay closed at $52.19 yesterday.



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