An exclusive AIM Group analysis: The breakup of Adevinta is coming. Here’s how

• A number of Adevinta assets are set to be sold
• Some of the core marketplaces likely to go public
• Some JVs are attractive for sale, others less so

It’s generally agreed that with Adevinta, the sum of the parts is greater than the whole.

A breakup of the European marketplace operator seemed inevitable for a while. But it became a near-certainty in May when Adevinta was acquired for $13.4 billion by Blackstone, Permira and a consortium of other investment companies.

Adevinta is a company with a long history, but also a very short one.

It was formed in 2018 as a spinoff from Schibsted, the 185-year-old Norwegian publishing company, and taken public one year later in a $6 billion initial public offering on the Oslo Stock Exchange. Schibsted owned a majority stake but slowly reduced its holdings. (It still owns a minority stake in the Blackstone-Permira consortium.) One year after Adevinta went public, it signed a $9.2 billion agreement to acquire EBay Classifieds Group. When that deal closed in 2021, Adevinta added Mobile.de and Kleinanzeigen in Germany, Marktplaats in the Netherlands, and 2DeHands / 2EmeMain in Belgium, along with other properties, to its portfolio.

Creating a cohesive company: Impossible

Bringing them all together cohesively was difficult. Apparently, impossible.

It’s tough creating synergies across marketplaces, whether across borders or across verticals, and Adevinta’s history proves that. Adevinta owns horizontals and verticals in real estate, autos and recruitment, spread across markets mainly in Europe, along with Latin America and North America. Making matters more difficult, each of the verticals, and many of the country operations, has its own nuances. Adevinta had hoped to create cohesion by narrowing its focus to five major European markets, but the business’s operations are still fragmented.

The best way the new owners can profit on the investment is to break it up into separate marketplaces, or logical business combinations with clear synergies, and sell some or all of them to owners who can realize their potential.

The three-pillar strategy

Until the recent sale, Adevinta pursued a strategy rooted in “growing at scale” to boost its value (per its 2021 capital markets day presentation). There was a belief that economies of scope and scale would win out.

As we see it, there were three core approaches to realizing those economies. But progress was slow, and it appears the new owners are now focused on just the third pillar: Slicing and dicing the businesses into logical operating units that raise their valuation, then selling them on.

The approaches were:

1. Focus on core markets: Adevinta’s strategy when it was publicly traded focused on its businesses in Spain, France, Benelux (Netherlands, Belgium), Germany and Italy. These accounted for 84% of Adevinta’s total revenue of €1.6 billion (LTM, 2021 Q3). The company planned to sell non-core assets in countries including Canada, Mexico, Hungary and Belarus, which delivered just 9% of its revenue. Meanwhile, Adevinta’s joint ventures in countries including Austria, Brazil and Ireland would be maintained to support growth. (They accounted for the remaining revenue, on a proportionate-share basis.) The exits were mostly achieved.

2. Platform optimization: Adevinta said it would build efficiencies by consolidating sites on several shared technology platforms including “transforming the best of our two recommerce platforms, Kleinanzeigen and LeBonCoin, into a unified global platform supporting Adevinta’s generalist marketplaces” and building out global infrastructure and product solutions. We’ve seen little evidence of progress on this. Adevinta’s most valuable businesses — Mobile.de in Germany, LeBonCoin in France, Marktplaats in the Netherlands, and Coches.net in Spain — are still running on separate platforms, despite the talk of consolidation. (In general, at other companies, harmonizing platforms hasn’t worked. Common platforms can work well when sites are all launched using the same platform; the Idealista sites in Italy, Portugal and Spain are a good example, helped by the fact that those three markets have many similarities. And Seek apparently moved its Asian sites earlier this year successfully onto a common platform with its core site in Australia. It’s a rare example of a successful transition, although it may take a few years of operation and development before real success can be confirmed.)

3. Build logical business combinations to boost potential trade value. Throughout Adevinta’s short history, the goal has always been to build a marketplace giant with synergies between parts. But few synergies were found, teamwork between companies has been minimal, and smaller assets have languished with underinvestment.

What can stay, what should go?

As the new owners look to divest, they’re examining the portfolio and figuring out how to maximize valuation for the parts. Some sites might be sold separately, while others might deliver better returns in logical groupings.

Some properties are already being offered for sale by Adevinta and DML Capital. Others are also being shopped; we’ve heard from investment companies that they are looking at various opportunities, but due to non-disclosure agreements they don’t tell us what Adevinta is offering or what they’re considering.

IPO? Package? Standalone?

As we see it, each property could be marketed and / or packaged in one of four ways:

• As an individual vertical operating in a single country
• In a multi-vertical combination in a single country
• In a single-vertical combination covering multiple countries
• In a multi-vertical combination covering multiple countries.

The primary consideration: How and where to sell the assets? For the right properties, an initial public offering could deliver a higher valuation than a private sale, although this depends on market conditions and liquidity.

For example, we expect Mobile.de will be floated, probably on the German exchange because plenty of deep-pocketed investors in Germany understand the business.

On the flip side: Idealista. We believe Idealista didn’t go public on the Madrid Stock Exchange at least in part because it wouldn’t have received an attractive valuation there. Instead, the company expanded into Portugal and Italy, opening the possibility to list in time on one of the global exchanges, London or even the U.S.

Four quadrants in a matrix

The Blackstone / Permira / Adevinta strategy can be visualized on a matrix, with each site or business occupying one of four quadrants.

For horizontals, we assess their position on the matrix according to their strengths in the three main vertical segments: automotive, real estate and recruitment. If a horizontal is strong in just one of the three (e.g. autos), or is strong only in general goods, we assess it a “single vertical” play; if it’s strong in two or three segments, we assess them as a “multiple vertical” business.

The chart below shows key Adevinta assets, likely ways they’ll be packaged, and which quadrants those packages fall into.

In the sections below, we look at Adevinta’s marketplaces country-by-country. Where we assess market positions, the rating is based on actual or estimated revenues (unless otherwise noted). Traffic numbers are from SimilarWeb.

France: Going public with LeBonCoin

Adevinta’s primary site in France is LeBonCoin, a powerful multi-vertical: No. 1 by revenue in autos (we estimate), No. 2 in real estate. It has a fantastic general-goods business, though it’s under increasing attack from Vinted. It also operates in recruitment but is relatively weak there.

In real estate, it owns the vertical AVendreALouer. In cars, it acquired L’Argus Group, primarily for its used-vehicle data and software businesses.

LeBonCoin generates 118 million visits per month, more than four times those of Vinted.fr, the No. 2 marketplace by traffic. (Vinted is primarily focused on general goods, applying a recommerce model.)

LeBonCoin also owns a range of smaller vertical sites including AgriAffaires (agricultural equipment classifieds), Locasun (holiday rentals), MachineryZone (construction equipment classifieds) and TrucksCorner (trucks and heavy goods vehicle classifieds).

It makes sense for Adevinta to strengthen LeBonCoin and take it public, along with AVendreALouer and L’Argus, on Euronext, a fairly liquid exchange, as a standalone business. Some of its specialist sites might be sold separately. In our quadrant framework, this is a single-market, multi-vertical strategy.

Germany: Another IPO? Just Mobile.de?

Adevinta’s assets in Germany are Mobile.de, the dominant auto marketplace, and Kleinanzeigen, the leading horizontal. The latter is strong in c-to-c vehicle classifieds, protecting Mobile.de’s flank. Kleinanzeigen is also strong in home-rental listings, putting it in contention for the No. 3 spot in real estate. It doesn’t have a material jobs business.

Mobile.de is big enough that it will almost certainly be sold through an IPO. The question is whether it will be sold alone, which would present investors with a simple, clean business, or be offered in a more complicated package with Kleinanzeigen.

The advantages of the latter option are:

1. Kleinanzeigen defends Mobile.de in ads for cheaper cars; Mobile.de might be less valuable if sold separately due to the risk of Kleinanzeigen competing or falling into the hands of a competitor, e.g. Germany’s No.2 site AutoScout24.de, and
2. It may also be difficult to achieve a high valuation for Kleinanzeigen on its own as EBay offers strong competition in Germany and Vinted is beating Kleinanzeigen in moving general-goods sales to transaction and in building a pan-European general-goods trading network.

Selling Mobile.de and Kleinanzeigen as a package may realize maximum value.

A Mobile / Kleinanzeigen package would straddle the line between the single-market / multi-verticals strategy and, given Mobile.de’s dominance and the scale of its revenues in autos, the single-market / single-vertical strategy.

In Italy, Adevinta’s horizontal Subito leads in general goods, is No. 2 in autos behind Autoscout24.it, and has a decent real estate business but is well behind Immobiliare, Idealista and their sister sites.

In autos, Subito is particularly strong in private-party listings — currently, 287,000 c-to-c car listings versus 139,000 at AutoScout24. Adevinta also owns autos vertical Automobile.it, but it draws one-tenth of Autoscout24’s traffic (1.4 vs. 15 million visits). It posted just €3.9 million of revenue in 2022 (its last published accounts) compared to AutoScout24’s €62 million. However, AutoScout24 isn’t truly dominant, yet; we estimate Subito’s auto revenue at around €20 million, which is much stronger than most No. 2s relative to their No. 1.

Adevinta also owns InfoJobs.it, No. 2 in recruitment revenue, but it’s far behind Indeed / Glassdoor. It pulled in just €6.7 million in revenue in 2023. Subito is also weak in jobs.

The natural sale would see Subito as an autos-led horizontal business sold in combination with Automobile.it, with InfoJobs sold separately.

Regulators a likely roadblock

It seems unlikely regulators would let AutoScout24 buy Subito and Automobile.it to consolidate the autos market.

Given its revenue size and No. 2 position, Subito will be unattractive on its own to top-tier private equity companies that look specifically for marketplace deals. And there’s no obvious trade buyer, especially as marketplace conglomerates are going out of fashion. Subito will most likely be acquired by a second-tier private equity investor, as was the case with Gumtree in the U.K.

There’s a very remote possibility someone would buy Subito for its real estate business.

Idealista, owned by private equity firm EQT Partners, runs Idealista.it and Casa.it as an integrated business that is challenging Immobiliare.it, the No. 1 (by revenue) and its two small sister sites Trovacasa.it and MioAffitto.it (all owned by Luxembourg-based Real Web SA). The competitors are neck-and-neck in traffic. One of the competitors could see Subito, which has a strong rentals business, as a potential kingmaker, delivering additional traffic and listing exposure to agent customers. However, it’s challenging to operate a vertical and a horizontal effectively under the same roof; the protagonists would probably consider it much more trouble than it’s worth.

InfoJobs assets combined in a sale

We suspect InfoJobs.it will be tagged onto the sale of InfoJobs.net in Spain, a single vertical / multi-market play, or sold off cheaply to a local service looking to build a stronger No. 2 presence through consolidation (single vertical / single market), or simply closed down (given it lost €681,000 at the operating level in 2023 and €295,000 in 2022).

Netherlands / Belgium: Underinvested

In the Netherlands, Marktplaats is a dominant horizontal. It leads in general goods and is No. 1 by revenue in autos, due to its dominant position in c-to-c. We estimate Marktplaats’ auto revenue at around €65 million in 2023, more than 2x its nearest competitor. The site is weak in the other verticals.

In Belgium, paired sites 2DeHands (Flemish) and 2EmeMain (French) lead in general goods and are No. 2 in autos. They’re weak in the other verticals.

We believe the Belgian and Dutch businesses have suffered from years of underinvestment, most recently by Adevinta but also by EBay before the merger. There’s good potential to invest and grow under a new owner.

Marktplaats and 2DeHands / 2EmeMain run on the same platform and have a substantial shared team, with joint functions operating out of the Netherlands. Because of this, the Benelux businesses would be difficult to separate and will almost certainly be sold as a package. Their strength in autos will most likely determine the buyer.

In the Dutch market, there’s a close fight in autos for second place between Automotive MediaVentions, jointly owned by DPG Media and Mediahuis (two publishers, both privately held), and AutoScout24, owned by private equity investment company Hellman & Friedman. AMV owns three key brands — AutoTrack.nl, GasPedaal.nl and AutoWereld.nl — which in combination have proven highly competitive. AutoScout24 operates AutoScout24.be and its sister site Autotrader.nl. We believe AMV and AutoScout24 are close in revenue, but data isn’t available to say which is No. 2 and which is No. 3. AutoScout24.nl leads AutoTrack.nl in traffic (visits) but the AMV sites in aggregate have more visits than the AutoScout24 sites. It’s too close to call.

In contrast, in Belgium, it’s clear AutoScout24.be is No. 1 in revenue.

If AMV or AutoScout24 acquires Marktplaats, it would create a pre-eminent No. 1 in the Netherlands, combining the strengths of horizontal and vertical, a hugely valuable position. In contrast, the sale of 2DeHands / 2EmeMain won’t dramatically shift the competitive balance in Belgium as AutoScout24 is already well ahead of all challengers.

DPG or Mediahuis likely buyers

Given how difficult it will be to split and separately sell the Benelux sites, we think Antwerp-based DPG, perhaps with Mediahuis, is the most likely buyer of the whole package. As well as propelling AMV to No. 1 in the Netherlands, DPG’s and Mediahuis’ marketing muscle in digital and printed news, radio and TV could also help drive general goods to a new level and perhaps even invigorate some of the other vertical segments. (Mediahuis has an interesting position in real estate classifieds in Belgium, while DPG and Mediahuis have a joint venture in recruitment across Belgium and the Netherlands.)

AutoScout24 should also be interested in Marktplaats. But given AS24’s dominance in Belgium, acquisition of 2DeHands and 2EmeMain would provide less value and could face regulatory scrutiny. So it’s hard to see a package sale working well.

AutoScout24 has also just made a much bigger acquisition, AutoTrader.ca, the dominant vehicle site in Canada. That’s already a lot to digest, and may also reflect a shift in focus, with AutoScout24 emphasizing its software and fintech businesses as key attractions. For a vertically oriented business, owned by a PE probably looking to exit within a couple of years, buying a pair of horizontals feels like a distraction.

Bottom line: Marktplaats will likely be sold as a single vertical (driven by a horizontal) to one of the top auto marketplace groups operating in the Netherlands, with 2DeHands / 2EmeMain as a tack-on. A twist might be for a PE investor to buy the Benelux businesses plus either AutoScout24’s Netherlands business, or AMV, with the aim of building the Dutch business, perhaps even for IPO, and selling the Belgian assets separately.

Spain: Splitting up the assets

Adevinta has strong businesses in Spain: Coches.net is No.1 in autos; InfoJobs.net is a No. 1 recruitment site that’s held out very effectively against Indeed and LinkedIn, and Fotocasa.es and Habitaclia.com, two real estate sites run on the same platform, are No. 2 in residential listings. Milanuncios, Adevinta’s horizontal in Spain, is the one weakness: It runs No. 2 to Wallapop and faces tough competition from Vinted. However, it’s been fairly effective in protecting Coches’ flank from Wallapop in autos.

(Coches.net is unrelated to Coches.com, the No. 4 Spanish automotive site, majority-owned by Banco Santander Consumer Finance.)

It makes no sense for Adevinta to list its brands together because, apart from the teamwork between Coches.net and Milanuncios in autos, few synergies exist. So Adevinta will probably split up its Spanish assets. The question is how?

Coches.net is the jewel in the crown, growing fast with no material competition to its core used-car business. It will almost certainly be sold with Milanuncios, which doesn’t produce much of its own revenue but helps deny c-to-c sales to Wallapop. Coches.net is a little small for an IPO and the exchange in Spain is not very liquid.

Coches.net could be packaged with Mobile.de, two market leaders, and floated publicly in Germany. Or, perhaps more likely, it could be sold to a top-tier private equity firm with expertise in auto verticals, for instance London-based Apax Partners, which currently owns Trade Me in New Zealand, Pickles Auctions in Australia and OpenLane in the U.S. (formerly KAR Global, an auto remarketer). It previously owned AutoTrader Group in the U.K., Baltic Classifieds Group, and Trader Corp. in Canada, parent of AutoTrader.caand related automotive marketplace businesses.

Another potential buyer is Hellman & Friedman, which owns AutoScout24. Coches.net would add another No. 1 and another Big 5 European market to its portfolio. If such a deal went through, AutoScout24 might be required by regulators to divest Sumauto, its joint venture with Vocento Group that owns auto sites in Spain including AutoCasion.com and AutoScout24.es. Sumauto is a distant No. 3 to Coches.net, with less than one-third the traffic.

InfoJobs is too small to IPO and will likely find an international buyer. It’s just a question of when. Recruit Holdings, Spain’s No. 2 jobs business with Indeed / Glassdoor, might like to acquire the property, gut it and turn it into a front door for Indeed, as it did with Workopolis in Canada. However, Europe’s competition authorities don’t typically like mergers between top-two sites with major market shares.

We see Germany-based StepStone Group, with recruitment marketplaces in more than 20 countries around the world, as most likely. StepStone owns the No. 1 job site in Germany; several No. 2s, including TotalJobs in the U.K., and many niche sites around Europe, including Turijobs.comin Spain (for jobs in tourism). It’s owned by Axel Springer, which is splitting its classifieds from its media businesses, with the classified companies to be held as separate JV companies, majority-owned by private equity firms KKR and CPP Investments. PE companies can usually pay more than a purely trade buyer, making StepStone our first bet as InfoJobs’ next owner.

JobCloud, No. 1 in Switzerland (owned by Ringier and TX Group), is another possible buyer. It has already spread its wings outside of Switzerland with a 49% stake in Karriere.at, Austria’s leading job site.

Australia-based Seek has also expanded abroad, but its focus to date has been on high-growth markets in Asia. It may be less interested in a more mature market that also comes with all the challenges of operating a business on the other side of the globe.

Greece-based Kariera Group could be a contender, but it would be a very big acquisition for Kariera. And that company’s strategy to date has been to acquire lower-ranked and niche sites rather than shoot for No. 1’s (other than in its home territory, Greece).

Red Arbor, based in Spain, has also been mooted as a trade buyer and was actually launched from the same incubator as InfoJobs many years ago. However, its focus has always been on Latin America, and InfoJobs is significantly larger in revenue terms, we estimate, than Red Arbor’s current business. It’s a very different kind of business from its operations in LatAm and doesn’t feel “on strategy”.

Might a PE buyer without any existing interest in recruitment marketplaces swoop in? We doubt it. There’s a nervousness around the future for recruitment marketplaces, with strong threats from LinkedIn, Indeed and possibly AI in play. And that sits on top of a general dislike among investors for cyclical businesses. InfoJobs isn’t so dominant it can rise above the fray; being a No. 1 in recruitment is much less comfortable than in autos or real estate, and that makes it a much less attractive sector for investors too.

Bottom line: InfoJobs is too small for an IPO and will most likely go to a strategic buyer, moving into the single-vertical, multiple-markets quadrant.

4 non-core markets, 3 of them JVs

Adevinta owns stakes in joint ventures in Austria, Brazil, and Ireland, all operated by the JV partner. These are all strong assets, though OLX-Brazil’s performance has been weak during the last few years. It also owns a non-core asset in Canada that it’s been trying to sell, unsuccessfully, for years.

Austria: Adevinta to sell stake to Ringier or TX?

Willhaben, Adevinta’s JV in Austria with Styria, is an especially strong multi-vertical, competitive in real estate, autos and recruitment. We think it ranks No. 1 in homes and vehicles as well as general goods. In recruitment, we think it’s No. 3 overall, though leading in blue-collar jobs.

We expect Styria to hang on to its 50% stake. Styria is a non-commercial trust, similar to the UK’s Guardian, with a portfolio of news sites, book publishers and marketplaces. We doubt it has sufficient funds to buy out the other 50%. Bringing in private equity will be hard if Styria, as is likely, wants to hold the stake long term; that limits the PE exit options.

Most likely, Adevinta will sell its stake, in consultation with Styria, to another media company. Obvious candidates are two Zurich-based companies, Ringier and TX Group, both experienced in operating joint ventures with media partners. They’re already involved indirectly in Austria via their JV JobCloud’s 49% stake in leading recruitment business Karriere.at. While we don’t believe a PE firm would buy Adevinta’s stake directly, one might be involved indirectly through its relationship with a media / trade buyer, e.g. if Ringier and TX Group acquired together via their JV Swiss Marketplace Group, which is also backed by PE firm General Atlantic.

Whatever the case, Adevinta is almost certain to unload its investment in Willhaben quickly. As Styria operates in multiple markets, as do the most natural purchasers of the 50% stake, the business will likely remain as multiple verticals in multiple markets.

Brazil: Not ready for an IPO

Adevinta and Prosus co-own Brazil’s No. 1 horizontal, OLX-Brazil and two real estate verticals, Zap and VivaReal, which dominate the property market. It’s a 50-50 partnership.

In cars, OLX-Brazil is dominant in c-to-c ads, and maybe No. 2 in overall revenue after WebMotors. ICarros is the other significant competitor. OLX Brazil isn’t competitive in recruitment advertising.

Our sense is that the business, based on recent performance, isn’t ready for an IPO. The risk for either JV partner in selling is that the market has huge long-term potential, which is going to develop slowly. That potential wouldn’t be reflected in a near-term sale price.

Though it’s rumored to be undecided, Prosus is the leading contender to acquire Adevinta’s half of the JV. In the event it chooses not to, it will be choosy about taking on a new partner in the JV. Whether the whole business is sold or just Adevinta’s share, Prosus will need to agree who buys it.

If Prosus doesn’t take out Adevinta, Adevinta’s share or the business as a whole will likely be acquired by a top-tier private equity firm. In either case, Adevinta and Prosus (if the whole business is to be sold) may want to take some time — years, not months — to invigorate its performance before they sell.

Ireland: Already up for sale

In Ireland, Adevinta co-owns Distilled in a 50-50 joint venture with Ireland-based DML Capital Ltd.

Distilled operates Daft.ie (an acronym for “Dublin Accommodation Finder Terminal”), by far the leading real estate marketplace in Ireland. It also runs the country’s No. 1 auto marketplace, Done Deal, which is also integrated into a legacy horizontal, Adverts.ie, which has a strong c-to-c autos business. Gumtree Jobs, Distilled’s recruitment and services site in Ireland, isn’t a Top 3 competitor.

DML is owned by brothers Eamonn and Brian Fallon, who founded Daft in 1997. Eamonn Fallon is CEO of DML Capital. Revenue at Distilled Limited rose by 12.8% year-on-year to €41.4 million in 2023, according to local accounts. Operating profit rose by 28.7% to €12.2 million.

The JV partners are already in talks to sell the business with potential private equity buyers, as reported in September by Reuters and confirmed to the AIM Group by independent sources. The business could fetch up to €600 million ($665 million U.S.), Reuters said. DML might retain a stake in Distilled after any sale.

Canada: Still looking for a buyer

In Canada, Adevinta owns and operates dominant horizontal Kijiji.ca and minor vertical KijijiAutos.ca. The autos business across both sites is No. 2 by revenue, but well behind top-performing AutoTrader.ca, recently acquired by AutoScout24. Kijiji has no substantial revenue in real estate or recruitment.

In real estate, Kijiji has lots of rental and for-sale listings, but the No. 1, Realtor.ca, a portal run by Canada’s main real estate agent organization, suppresses revenue potential because agents get their listings at no extra charge as a benefit of their low-cost membership.

It’s hard to predict who might acquire Kijiji. Adevinta, focused on Europe, has been looking to sell Kijiji pretty much since it acquired it in the 2021 merger with EBay Classifieds Group.

Acquisition by AutoTrader.ca wouldn’t get past regulators, and in any case wouldn’t offer the dominant No. 1 much value, while adding the headache of running a major horizontal. (Trader Corp., AutoTrader.ca’s parent, owns and operates LesPac.com, a small horizontal serving Francophone Canada with a strong cars angle.)

Canada’s No. 3 autos site, CarGurus.ca, might consider the deal to strengthen its position. However, CarGurus has divested nearly all its non-U.S. operations in recent years (while remaining in Canada and the U.K.). Currently, it’s focused on strengthening its core U.S. marketplace and righting CarOffer, its money-losing digital wholesale arm. In any case, it’s more likely to acquire content / community sites to build its international business, as it’s done in the U.K. If it were into owning horizontals, we’d have expected it to acquire Gumtree.co.uk plus Motors.co.uk when they were going cheap. So a CarGurus buyout also looks unlikely, at least in the foreseeable future.

For private equity, second- or third- or even lower tier, it’s hard to see an endgame with a decent exit. Competition is strong in all the major verticals, and Canada isn’t screaming out for a move to transaction in general goods.

There are no obvious buyers, or certainly not at a good price. That’s why it hasn’t sold to date.

Perhaps it could be offered up to OfferUp, its soulmate in the U.S.?

The AIM Group made multiple attempts to speak with Adevinta executives in the months we were developing this article, and did not get a response.

Nov. 27: Correction — Daft stands for “Dublin Accommodation Finder Terminal,” rather than “Dublin Area Flats and Tenancies,” as was originally stated.