eBay bids for Gmarket; Longs jumps on CVS offer; Genetech spurns Roche offer

By Aaron Hochman-Zimmerman

New York, Aug. 13 - eBay Inc., typically a specialist in selling, has again stepped into the buying arena with its eye on Gmarket Inc.

However, true to its retail reputation, eBay set out to get its prize from Interpark Corp. second-hand.

In conventional retail, Long Drug Stores Corp. shares flew by over 30% after an offer was announced by CVS Caremark Corp.

Elsewhere, Genentech Inc. turned down the $89 per share offer from Switzerland's Roche Holding AG, likely hoping to see a better price follow.

The plan may have backfired after Roche responded by standing firm on its initial offer.

Meanwhile, the Dow Jones Industrial Average ended significantly lower by 109.51, or 0.94%, at 11,532.96, while the Nasdaq Composite Index dropped just 1.99 or 0.08% to finish at 2,428.62.

The S&P 500 gave up 3.77, or 0.29%, to close at 1,285.82.

eBay goes shopping

One of the world's most recognizable online marketplaces has reportedly been doing some shopping of its own.

eBay has been holding talks with South Korea's Gmarket to buy a piece of the company, but not directly from the company.

eBay has been meeting with Interpark Corp. to buy all or some of its stake in Gmarket.

Under that arrangement, "I don't even know if Gmarket has the ability to block it or if they have any say in it," an equity analyst said.

Many things about the deal left obvious questions for the market.

"It's a head-scratcher," he said.

However, "if you look at their past they've struggled quite a bit in markets outside the U.S. and Europe," the analyst said about Ebay.

eBay may have taken to "just buying up stakes" in other markets, he said, noting that Ebay holds a 20% stake in Latin America's dominant online marketplace MercadoLibre Inc.

However in South Korea, "they already have a pretty large business of their own," the analyst said about eBay.

That business is firmly in second place to Gmarket in the region so "it's almost like you're hedging your bet," he said.

The analyst suggested that eBay would benefit from the chance to mine advice out of Gmarket if the two were partners in order to help improve its own standing in the sector where it has struggled to find success.

Still, eBay may not be interested in baby steps forward. It has shown its ambition to grow in the past and perhaps it intends to buy the piece of Gmarket in question and then combine South Korea's largest and second largest online marketplaces.

The problem that exists with that plan is regulatory in nature. The two companies would then control approximately 50% of the market share, the analyst said.

"Is this going to be approved?" the analyst asked, admitting he is unsure of how South Korean regulators would view such a deal.

Whether or not the initial proposal from eBay to Interpark goes through is still in the wait-and-see phase, but with confidence the analyst said: "eBay is definitely interested."

Shares of eBay (Nasdaq: EBAY) slipped $0.25, or 0.96%, to finish at $25.80.

Shares of Gmarket (Nasdaq: GMKT) launched up by $3.18, or 14.34%, to close at $25.36.

CVS goes for Longs

Shares of Longs Drugs were on a high after the announcement of a drug deal with CVS Caremark.

CVS has offered Longs' shareholders a $71.50 per share, which represents a 32% premium to Tuesday's close.

"This transaction provides tremendous benefits to CVS Caremark by accelerating our expansion in very attractive drugstore markets and strengthening our geographic reach," Tom Ryan, chairman, president and chief executive officer of CVS said in a statement.

"In fact, Longs has a significant presence in 10 non-CVS markets that are among the top 100 drugstore markets in the country. More than 490 of the stores we are acquiring are located in the Central and Northern California and Hawaiian markets, where Longs is a leading player," he added.

Shares of Longs Drug Stores (NYSE: LDG) jumped by $16.66, or 30.83%, to $70.70.

Shares of CVS Caremark (NYSE: CVS) fell by just $0.02, or 0.05%, to $38.03.

The deal is expected to close in the fourth quarter.

Roche firm after Genentech rejection

The independent thinkers at Genentech have decided to remain independent thinkers for at least a little while longer.

Genentech rejected the $89 per share offer from Roche for the 60% Roche does not already own saying the offer "substantially undervalues the company," it said in a press release.

However, Genentech said it could be persuaded to come back to the table if Roche could muster a higher offer.

"The special committee would consider a proposal that recognizes the value of the company and reflects the significant benefits that would accrue to Roche as a result of full ownership," the release continued.

Roche was not so easily pushed off of its original offer, a market source said.

According to reports, Roche considers its offer "fair and generous," the market source said.

Shares of Genentech (NYSE: DNA) inched up by $0.52, or 0.53%, to end the day at $98.73.

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