Friday, October 06, 2006

Does TOM really need Eachnet?

Tom Group is said to be in the preliminary talk with Eachnet, the 100 percent owned online auction website owned by Ebay. Though both side declined to comment official, Tom's website already has a link of "Auction", marked in the red color, which forwards visitors to Eachnet. They may have the off-the-table relations for a while, I have no doubt.

As one of the biggest media group in China, Tom group, with the biggest shareholder of Li Ka-shing family, already covered several fast-growing areas in China, including Internet, Outdoor advertisting, Sports, TV and film, and Skype. With its strong capital backup, it is good at M&A to strengthen itself in various sector. For example, it spent US$10 million, half in cash and half in covertible bonds, to get 27 percent to Huayi Brothers, the company making films including the recent-showing The Banquet, and The World without Thieves.

However, it is a question for Tom, already with a online shopping part but without experience on the Eachnet, to help Eachnet to outperform its strong competitor Last time, I said Eachnet is out of the style because it already among the popularity among sellers. For instance, compared with the laptop sector of the two side, Taobao has over 11000 laptops on sale, over three times than Eachnet with 3600 units. How Tom could beat Taobao, when Ebay couldn't succeed?

I stay concervative on this deal, however, Tom may need a channel of real money, while Eachnet could provide one. Tom's Skype website definitely wants to attract Eachnet's users who already have accounts. The Merge may help consolidate the users, but don't always forget users are also easy to go away after the consolidation.

Good luck, Tom, Ebay and Eachnet. Not sure which investment bank is advising on the deal right now, but please make some good point first.

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