eBay, Etsy Set July 30 Depop Closing As Exit Fee Rises To $158M
eBay and Etsy now expect the ~$1.2 billion sale of Depop to close July 30 after signing a revised agreement that narrows eBay’s ability to walk away and raises the potential Business Disruption Fee to $158 million.
The companies entered into the second amendment July 12, three days before UK regulators cleared the acquisition.
Liz Morton
According to a new 8-K filed by Etsy, the closing is set for the later of July 30 or the second business day after any remaining conditions are satisfied or waived.
The amendment confirms that key closing conditions had already been satisfied as of July 12 and sharply limits which later developments eBay can use to challenge the deal.
eBay then permanently gave up the right to use anything that happened on or before July 12 to argue those conditions were not met.
For events after July 12, eBay can generally only rely on intentional conduct by Etsy or Depop that they knew would seriously breach the agreement or harm the business.
That makes it much harder for eBay to point to ordinary changes in Depop’s performance or operations as a reason not to close. The amendment does not guarantee the deal will close, but it substantially raises the bar for a last-minute exit.
The agreement also increases the Business Disruption Fee payable by eBay under certain termination scenarios.
A May amendment set the fee at $102 million for qualifying terminations after July 15 and on or before July 31, rising to a maximum of $136 million after July 31.
Liz Morton
The latest amendment replaces those tiers with a $158 million fee for qualifying terminations after July 15.
No Business Disruption Fee is payable if the acquisition closes, and exceptions remain for certain circumstances involving fraud or willful breach by Etsy. But the amendment clearly increases what eBay could owe if it fails to complete the deal under one of those scenarios.
The companies will also calculate most purchase price adjustments using Depop’s financial position as of July 17, nearly two weeks before closing. Etsy is restricted from taking money or other value out of Depop after that date, and any prohibited amount can be deducted from what Etsy receives.
Because most purchase price adjustments will be measured as of July 17, eBay will pay interest on the purchase price from that date through the day before closing at SOFR plus 0.40%.
eBay agreed in February to acquire Depop as part of a broader push into secondhand fashion and younger consumer demographics. The deal was initially expected to close during the second quarter, but regulatory reviews in Australia and the UK pushed the timeline into the third quarter.
Australia cleared the acquisition in May, while Etsy previously disclosed approval in the United States and Germany. The CMA cleared the transaction July 15, avoiding a deeper Phase 2 investigation that could have delayed the sale.
Depop is expected to continue operating under its existing brand and standalone platform after the acquisition.
The deal remains under scrutiny as eBay faces questions about capital allocation and GameStop CEO Ryan Cohen continues his effort to acquire the company.
eBay has also told investors it does not expect the Depop acquisition to have a positive impact on earnings until at least 2028, leaving management with significant work ahead to justify the price and strategic value of adding another standalone marketplace.
With regulatory approval secured, the closing set for July 30 and the potential cost of walking away now higher, Depop is expected to become part of eBay unless a serious last-minute issue emerges.
