Carl Icahn wants eBay Inc (EBAY) to spin-off PayPal

Posted Jan 22, 2014

Carl Icahn is restless with tech companies today! The billionaire investor disclosed on Twitter today that he now has a $3 billion stake in Apple and wants the company to do a major share buyback. He also announced today that he wants eBay Inc (NASDAQ:EBAY) to separate their PayPal unit as a separate entity. eBay said in their court quarter earnings that Icahn took almost a 1% stake in the company and wants PayPal to spin off. Carl Icahn nominated two of his employees for seats on eBay’s board. eBay announced that their board authorized a $5 billion stock repurchase program in addition to the $600 million, which is remaining from a past authorization.

eBay said that their board explored the separate of PayPal in-depth, but ultimately decided that the company and its shareholders are best served by their current strategic direction of the company and does not believe that separating the companies is not the best way for maximizing shareholder value. eBay said that they would pass Carl Icahn’s board nominations to their Corporate Governance and Nominating Committee. eBay reported earnings of 81 cents per share excluding certain items on revenues of $4.53 billion. Analysts were estimating 80 cents on $4.54 billion.

“No other payments competitor has achieved PayPal?s success ? because no other competitor has a commerce platform like eBay. PayPal is successful precisely because we are part of eBay Inc., not in spite of it. eBay Inc. has helped drive our success for more than a decade, and we continue to believe we?re far more valuable together,” said PayPal and eBay in a statement about Icahn’s suggestions. “There are three main reasons: first, eBay accelerates PayPal?s success; second, eBay data makes PayPal smarter; and third, eBay funds PayPal?s growth. Being part of eBay Inc. gives PayPal access to an enormously valuable global customer base; it provides a source of low-cost capital that lets us aggressively fund growth and innovation in areas such as mobile and credit, as well as helping us acquire companies such as Braintree to enhance our competitive position. And being part of eBay Inc. enables us to broadly leverage the company?s technology capabilities, data, commerce platforms and relationships with retailers, brands and large merchants worldwide. We?re committed to making paying easier, and shopping more fun.”