By Ben Dummett

EBay Inc. agreed Tuesday to sell its classified-ads business to Norway's Adevinta ASA for $9.2 billion in cash and stock, in a deal that allows the online auction pioneer to refocus on its core marketplace business while positioning it to benefit from growth in the classifieds unit.

The deal comes as activist investors have pushed eBay, once a highflying internet conglomerate with brands such as PayPal and StubHub, to dismantle that structure and try to boost value by simplifying its operation. The classifieds unit is one of the last remaining businesses outside the company's core after it struck a deal to sell its StubHub ticketing division last year.

The Wall Street Journal reported Monday that a deal was close.

EBay will receive $2.5 billion in cash in addition to about 540 million shares of Adevinta, which is listed on the Oslo stock exchange. The San Jose, California-based company will own a 44% stake in the combined entity but hold 33% of the voting rights, Adevinta said.

EBay's classifieds unit primarily operates internationally across Canada, parts of Europe, Africa, Australia and Mexico. Its platforms allow users to post goods and services in their local communities, similar to Craigslist in the U.S.. Last year, the division produced $1.1 billion in revenue, compared with $7.6 billion generated by its marketplace business.

EBay had been seeking to sell the unit since around February. Its decision to retain a big stake in the combined entity under the deal shows that newly appointed Chief Executive Jamie Iannone is betting on ultimately generating a bigger return by maintaining a say in the business with the option of selling down the position at a future date.

Adevinta oversees digital marketplaces in 15 countries, with a significant presence in parts of Europe, South America and Mexico. By acquiring the eBay business, Adevinta would significantly expand its presence in Germany, one of Europe's biggest economies, where its current operation doesn't hold a dominant position.

The new entity's operations will have total annual revenue of $1.8 billion, with a major presence in 20 countries. The deal is also expected to ultimately boost annual operating profits by up to $185 million, mostly through cost-cutting, Adevinta said.

Adevinta's stock was trading 36% higher in early trading.

The Adevinta deal now clears the way for eBay's Mr. Iannone to focus on reviving the company's core marketplace business that has suffered amid growing competition from Amazon.com, the U.S.'s biggest online retailer. Mr. Iannone was formerly chief operating officer of Walmart Inc.'s e-commerce division.

His appointment in April came as Elliott Management Corp. and Starboard Value LP had been urging eBay to boost its share price by shedding businesses the hedge funds had considered noncore. The funds received board seats in settlement agreements and the clash prompted Devin Wenig, eBay's former CEO, to leave the company in September over disagreements on strategy.

Citigroup was the financial adviser to Adevinta. Skadden, Arps, Slate, Meagher & Flom LLP, BAHR and Cleary Gottlieb Steen & Hamilton were legal advisers. Goldman Sachs and LionTree were financial advisers to eBay. Wachtell, Lipton, Rosen & Katz and Quinn Emanuel Urquhart & Sullivan were legal advisers. Barclays was the financial adviser to Schibsted ASA, Adevinta's majority shareholder that supports the deal.

Write to Ben Dummett at ben.dummett@wsj.com