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EBAY » Topics » Our expected acquisition of Bill Me Later will expose us to new risks.

This excerpt taken from the EBAY 10-Q filed Oct 23, 2008.
Our expected acquisition of Bill Me Later will expose us to new risks.
 
We have signed an agreement to acquire Bill Me Later, Inc., a company that provides transaction-based credit. The acquisition is expected to close during the fourth quarter of 2008. Upon acquiring Bill Me Later, we will be exposed to new risks, including:
 
  •  risks of writedowns related to Bill Me Later’s loan portfolio (expected to exceed $500 million at closing);
 
  •  risks related to the willingness of consumers to borrow in the current economic environment and risks related to Bill Me Later’s evaluation of the creditworthiness of such consumers;
 
  •  risks that the nonpayment rate for Bill Me Later’s loans would increase as a result of worsening economic conditions, higher unemployment rates, and other factors, which would lead to increases in loan chargeoffs;
 
  •  any termination or interruption of services provided by certain third parties to Bill Me Later, including payment processors and gateways that process transactions for Bill Me Later and CIT Bank, which funds the consumer loans at the point of sale, prior to Bill Me Later purchasing the receivables;
 
  •  risks that top merchants may terminate their agreements with Bill Me Later; and
 
  •  other risks similar to those faced by PayPal, including the risk of systems failures, security breaches or other loss of customer data, fraud, intellectual property claims, compliance failures, and changes to regulations relating to credit offerings.


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