In move to challenge Amazon, eBay to purchase GSI Commerce in $2.4 billion deal

Online auction house eBay has floundered over the past few years, taking a big hit during the drop in consumer spending that resulted from the worst recession in a half-century. In a bid to reignite its once white-hot business, the company announced it has agreed to buy GSI Commerce, an Internet marketing services company.

With the deal worth a reported $2.4 billion, eBay aims to shore up its position as an online retail powerhouse. Moreover, eBay hopes that GSI will help the company become more competitive with one of its biggest rivals, Amazon. The deal is the biggest for eBay since its 2005 acquisition of Skype for $2.6 billion.

According to analysts, eBay is paying a hefty premium for GSI: The company offered shareholders a 51 percent premium over the closing price on Friday. Since the deal was announced, GSI shares soared 51 percent higher, while eBay's fell 3 percent. The company fills a big hole in eBay's services, said Stifel Nicolaus analyst Jordan Rohan.

"The acquisition gives eBay more competitive weapons to minimize the market share shift to Amazon," Rohan told The Wall Street Journal. "This is a big hole strategically that eBay is trying to plug."