eBay 2011 Annual Report Download - page 106

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approximately $2.4 billion . In addition, we paid an amount equal to $0.33 per share or approximately $24.3 million , which was separate and
distinct from the per share merger consideration, to certain GSI security holders in connection with the settlement of litigation related to the
acquisition of GSI and recorded that payment in general and administrative expenses. GSI is reported as a separate segment.
Divestiture
In conjunction with the acquisition of GSI, we immediately divested 100 percent of GSI's licensed sports merchandise business and 70
percent of GSI's ShopRunner and RueLaLa businesses (together, the "divested businesses"). The divested businesses were sold to a Kynetic LLC
(formerly known as NRG Commerce, LLC), which we refer to as Kynetic, led by GSI's former Chairman, President and Chief Executive Officer,
Mr. Michael Rubin, for a note receivable with a face value of $467.0 million . The note receivable bears interest at an annual rate equal to 3-
month
LIBOR plus 1.10% , matures in December 2018, and is secured by certain assets of the divested businesses. The fair value of the note receivable
was determined to be $286.8 million based on comparable market interest rates and is recorded in other assets in our consolidated balance sheet.
The difference between the fair value of the note receivable and the carrying value of the divested businesses resulted in a loss of approximately
$256.5 million . The loss was recorded in interest and other, net in our consolidated statement of income.
The carrying value of our retained 30 percent stake in the ShopRunner and RueLaLa businesses was $75.2 million and is recorded in long-
term investments. We account for our retained interest in the ShopRunner and RueLaLa businesses under the equity method of accounting and
record our proportionate share of net income (loss) on a one-quarter lag as a component of interest and other, net in our consolidated statement of
income. Our exposure to loss resulting from our financing arrangement with Kynetic and equity investments in RueLaLa and ShopRunner is
limited to the carrying value of the note receivable and equity investments, respectively. We have also entered into a transitional services
agreement, pursuant to which GSI will provide to the divested businesses certain transitional services for a limited period, as well as certain other
commercial agreements with Kynetic and its affiliates.
Intangible Assets
The following table sets forth the components of intangible assets acquired in connection with the GSI acquisition (excluding intangible
assets sold in connection with the divested businesses) (in thousands, except years):
The allocation of the purchase price for the acquisition has been prepared on a preliminary basis and changes to that allocation may occur as
additional information becomes available. We have included the financial results of GSI in our consolidated financial statements from the date of
acquisition.
F-15
Description Fair Value Useful Life (Years)
Trademarks
$
8,400
2
User base
667,900
5
Developed technology
142,800
5
Total
$
819,100