eBay Reaches ‘Détente’ with Investor Icahn (April 10, 2014)
eBay Inc. investor Carl Icahn has backed off his proposal for the online auction Website to spin off its PayPal subsidiary following discussions with eBay, of which he is a 2 percent owner. Icahn also agreed to rescind the nominations of two of his employees to eBay’s board of directors. In return, the company has agreed to a suggestion by Icahn to appoint as an independent director to the board business executive David Dorman.
“We are happy to have reached this détente with eBay,” Icahn said in a news release issued by eBay today. He also noted having several conversations this week with eBay CEO John Donahoe, and “we both strongly believe in the great potential of eBay and PayPal, and I have found a number of his ideas to be extremely compelling.”
Following Icahn’s call earlier this year for PayPal to be spun off, eBay’s board of directors sent letters urging investors to vote against Icahn’s breakup proposal at the annual shareholder meeting in May. “Our board is in unanimous agreement that neither Mr. Icahn’s breakup proposal nor his nominees are in the best interests of eBay’s shareholders,” the board said in its letter.
Though an agreement has been reached between the two sides, Icahn makes no allusions that he has given up on the idea of splitting up eBay and PayPal. “I continue to believe that eBay would benefit from the separation of PayPal at some point in the near future and [I] intend to continue to press my case through confidential discussions with the company,” he said. “While [Donahoe] has made no commitments regarding such a separation, he and I have agreed to meet regularly when he is in New York to discuss strategic alternatives.”