Carl Icahn Pulls Proposal that eBay Sell off PayPal

Carl Icahn dropped his call for eBay to split off its fast-growing PayPal payments unit.

Activist investor Carl Icahn is loosing eBay bid. Photo: Cheon Fong Liew/Flickr

Activist investor Carl Icahn is loosing eBay bid. Photo: Cheon Fong Liew/Flickr

Carl Icahn, activisr investor, has recently dropped his call for eBay Inc to split off its fast-growing PayPal payments unit after he failed to drum up support from major shareholders of the company. However,  the tycoon promised to keep pressure on the e-commerce firm.

The company revealed to reporters that it had initiated its fight with the Icahn, who also withdrew his two nominees for the eBay board ahead of the company’s annual shareholder meeting next month.

“In a concession to Icahn, eBay said it would add David Dorman, a founding partner of investment firm Centerview Capital Technology, as an independent director on its board,” reports The Economic Times.

However, the billionaire who three months ago called for hiving off PayPal before engaging in weeks-long war of words with eBay, made it clear that he was still stick to that idea.

The billionaire is said to soften his stance earlier this week, claiming that he found several of Donahoe’s ideas “compelling” and looked forward to working with eBay’s board.

“I continue to believe that eBay would benefit from the separation of PayPal at some point in the near future,” Icahn said in a statement. He said Donahoe had agreed to meet regularly to discuss strategic alternatives for PayPal.

In an interview to the media, Icahn revealed that he might add to his eBay holdings. He added that while he supported a PayPal split in the near future, now was not the time.

“If they did the split-up now, yes, the stock would go up,” Icahn said. “But I am looking at it and think, ‘Why do it now?’ I think the stock is very undervalued.”

He also emphasized that he “did not capitulate” to eBay. He and Donahoe will meet regularly to discuss strategic alternatives for PayPal, now eBay’s fastest-growing business.

Icahn went on, adding that he greatly respected Dorman, a former AT&T Inc CEO and current chairman of CVS Caremark Corp, who has known venture capitalist and eBay director Marc Andreessen for years.

“I am tickled pink to welcome my old friend David Dorman to the eBay board!” Andreessen said in a tweet.

“The billionaire told CNBC that his perspective shifted during talks with major eBay shareholders who did not to see eye to eye with him about a PayPal spinoff. They also threw their support behind Donahoe,” writes Reuters.

The e-commerce company’s shares dropped by 2.7 per cent at $54.40 in midday trading.

PayPal was founded in the late 1990s and gathered much popularity back in 2002. EBay acquired it soon afterward for $1.5 billion. Now PaePal can be considered one of the most profitable businesses of Ebay, as last year the number of  its users grew up to 143 million, up 16 percent from a year earlier.

Which is more, PayPal’s revenue increased by 19 per cent during the holiday quarter, beating a 12 per cent rise at the marketplaces unit.

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