A quick announcement yesterday by eBay Inc (EBAY) revealed the auction is selling its 20% stake in MercadoLibre Inc (MELI). eBay’s plan is to sell 7.1 million shares in a public offering with an option for an additional million shares, according to a press release by MercadoLibre. This represents most of eBay’s investment in MercadoLibre and is worth over $1.2 billion based on an offering price of $168.00. eBay will retain the proceeds of however much it raises.

eBay acquired its piece of MercadoLibre in 2001 when the Argentinian “eBay of Latin America” bought iBazar, a classified website owned by eBay. eBay’s blog post yesterday said, “The sale will enable us to realize a significant gain on our investment, and we intend to use the net proceeds in a manner consistent with our capital allocation strategy.” Further details about this capital allocation strategy are likely to be more detailed in eBay’s earnings report next week.

Over the past year and a half, eBay has been spinning off its non-core companies, most notable of which was Paypal Holdings Inc (PYPL) last summer. Instead of its motley crew of companies, eBay has been focusing its attention on growing its core e-commerce business. Proclaiming itself the anti-Amazon, eBay is not promising one-click shopping with fast shipping. Rather, eBay has begun encouraging customers to browse the website for bargains and treasures, much like how we would have shopped in the pre-internet age.

(related: Can eBay Stock Still Pay Without PayPal?)

eBay’s share price was only marginally effected by the news. The stock closed 1% higher yesterday than the previous day’s close. MercadoLibre though, fell 8% yesterday to $168.21. Late yesterday, MercadoLibre issued a press release saying the offering price is set at $168.00 which is slightly below current trading levels. As mentioned above, investors will get a lot more information about this upcoming offering next Wednesday when eBay is expected to report its third quarter earnings.

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