Online auction house eBay has signed a definitive agreement to acquire alternative online payment scheme Bill Me Later for around $820 million in cash and $125 million worth of outstanding options.
Founded in 2000, Maryland-based Bill Me Later operates a service that enables consumers to shop online without using a credit card. Registered users of the service can defer payment on purchases and receive a bill that can be paid in full without interest or fees, or go via payment plan, which involves interest.
Last year US e-retailer Amazon made an undisclosed equity investment in Bill Me Later and added the instant credit service to its online shopping sites.
EBay says it will combine the Bill Me Later unit with its PayPal division. The Bill Me Later deferred payments financing service will be offered to customers who use eBay and PayPal.
In turn the move enables PayPal to expand its customer base to 1000 of the most popular Web sites, says eBay.
"By combining the best of PayPal and Bill Me Later, we can offer an even stronger service for consumers and merchants," says PayPal president Scott Thompson, who will oversee both businesses.
Gary Marino, chief executive officer of Bill Me Later, will continue to run the business unit and will report to Thompson as part of the PayPal senior executive team.
EBay says Bill Me Later's credit risk modelling and analysis have "consistently performed better than the consumer credit industry average". Combined with eBay's and PayPal's transactional data monitoring "this expertise will bolster the company's ability to drive down risk in the payment system," says the auction house.
Subject to various closing conditions, the acquisition is expected to be completed by year-end.
Bill Me Later isn't the only acquisition announced by eBay today. The auction house is also buying Danish online classifieds site Den Bla Avis and vehicles site BilBasen for approximately $390 million in cash.
News of the acquisitions comes as eBay discloses plans to cut 1000 jobs - around 10% of its workforce. The auction site is also axing "several hundred temporary workers" and says it will reduce open positions.
EBay says the job reduction is intended to simplify and streamline its organisation and improve its cost structure.