A joint venture company in China operated by Internet auction pioneer eBay Inc. and China's Tom Online Inc. appears to be hitting a rough patch even before the venture sells a single item.

 EBAY and Tom Online announced their intent to jointly own and operate an online auction business in China. Meanwhile, eBay would be shuttering its primary auction Web site in China. Executives at both companies had high hopes. EBay's executives said it would be better served in China with a local partner who knows the market, rather than operating as a standalone entity as it had been doing. Meanwhile, Tom Online would have a new source of revenue to draw from.

Yet nearly three months later, the deal's appeal among consumers and financial community is waning after an initial burst of interest, according to Tom Group Inc., one of Tom Online's largest shareholders.

This diminishing interest, and what it forecasts about the deal's success, was cited as one of the main reasons why Tom Group has offered to buy all the outstanding shares of Tom Online it doesn't now own, and take the company private.

"Tom Group believes that market reaction, while initially positive, has since become muted," Tom Group said in a recent regulatory filing explaining why its bid to take Tom Online private for about $200 million.

"While Tom remains confident in the future prospects for Tom Online, (it) is of the view that the short-and-mid-term volatility and potential uncertain financial performance make Tom Online poorly suited to remain a publicly listed entity."

In response, an eBay spokesman said the company remains optimistic about the joint venture and it's still on track to launch sometime later this year. The spokesman added "we do not believe this action has any significant impact on our joint venture partnership in China."

Source:佚名