EBay Inc. being circled by a pair of activist investors who want the online market to consider ways to part with the ticket business and StubHub classified ads.
Elliott Management Corp. announced on Tuesday that it has more than 4% stake in eBay and urged the online market to consider spin-offs or sell StubHub and classified ad businesses because they could be of more value to themselves.
Other hedge funds, Starboard Value LP, also have a large position on eBay for less than 4% and have talked with the company about the same changes, according to someone who knows the problem.
Starboard took over shares at least six months ago and has spoken with the San Jose, California-based company in recent months about increasing its operations and potentially separating the two businesses similar to the previous way of playing the PayPal Holdings Inc. payment platform. , said the person.
As of Friday, eBay shares have fallen by around 20% over the past year. They surged 8.6% to $ 33.68 in early trade Tuesday on news of the involvement of the two activists. This company has a market value of around $ 30 billion.
In a letter sent Tuesday to the eBay board, Elliott also said eBay must focus on revitalizing its core market business, carrying out operational improvements to increase margins and ensuring having the right leadership team.
Elliott said in his letter that eBay created a unique forum to match buyers and sellers, but failed to take advantage of more sales moving online. Elliott's colleague Jesse Cohn noted that his own mother had sold jewelry on the website for more than a decade.
StubHub, which eBay bought in 2007 for $ 310 million, contributed around 14 percent of eBay's more than $ 2 billion in revenue in the third quarter of last year. Its business is classified as around 12%. The company will report fourth quarter results next week.
EBay has attracted activists in the past. Billionaire investor Carl Icahn appeared on eBay shares in 2014 and urged a breakup. Following his own review, eBay plays PayPal, giving each new eBay holder a part of PayPal, which is now a company worth more than $ 100 billion. Mr Icahn sold his eBay position immediately after the split and last year left his stake in PayPal, with a value that has doubled since the spin-off.