Battle Erupts Between eBay And Icahn
Within the past couple of weeks a fierce battle has erupted between Carl Icahn, the legendary investor known for his sharp and witty moves, and eBay (NASDAQ: EBAY). Icahn wants eBay's management restructured; eBay would like to be left alone. Icahn's latest salvo came February 24, when he released an open letter to stockholders of eBay.
Here are highlights from his letter:
Icahn believes that Marc Andreessen, who founded Netscape, and Tim Cook, who is CEO of Apple, are “value-driven for themselves,” meaning that they would rather personally profit than give profits to shareholders. Under the heading “Corporate Governance Failures Do Not Have A Shelf-Life” gives as an example Andreessen's personally profitable role in the sale of Skype. Icahn contends that eBay shareholders could have made $4 billion if Andreesen's consortium hadn't bought most of Skype from eBay before Skype was sold to Microsoft for $8.5 billion.
Icahn questioned Tim Cook's loyalty to eBay because Cook owns nearly $1 billion worth of stock in Intuit, a “fierce competitor” of PayPal, whom eBay owns. Icahn asked, “Is it good for PayPal to have a competitor in the board room gaining insights into its operations, product pipeline and proprietary technologies?”
This is another part of Icahn's push for eBay to shed PayPal Back on January 23, 2014, Icahn publicly released a statement which stated that, “Makes no sense to keep PayPal together with Ebay.”
Icahn closes his latest missive: “We believe corporate governance at eBay is dysfunctional. Let's end this charade. We hope you will VOTE FOR OUR SLATE OF DIRECTORS and afford us the opportunity to represent and serve ALL eBay stockholders as members of the eBay Board. We also urge you to vote in favor of our precatory proposal in order to send a clear message to the eBay Board that eBay and PayPal must be separated – NOW.”
Following this attack on eBay's board, eBay backed its board of directors and bluntly called Icahn's statement “blatantly false” in a statement made by eBay's board. While the letter defended the Skype transaction, it did not address the PayPal conflicts issue Icahn raised.
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