Icahn in January called for eBay to hive off its fast growing PayPal
business, arguing the unit is undervalued as part of eBay.
In recent weeks, Icahn has sent a series of open letters critical of
eBay Chief Executive John Donahoe, the board, and corporate
governance at the e-commerce company.
In his latest missive to fellow eBay shareholders, he said selling
off only part of PayPal would retain the benefits of a stand-alone
PayPal while maintaining the efficiencies of having eBay and PayPal
"A partial separation of PayPal is not a new idea, and we're glad to
see that Mr. Icahn now seems to agree that a full separation of
PayPal is not a good idea," eBay said in a statement, re-iterating
its position that the two businesses are better off under the same
As a public company, the payments firm should also command a higher
valuation than as part of a larger corporation, shedding the
"conglomerate discount," Icahn said. Its stock could then also be
used to bankroll future acquisitions.
"Conducting a 20% IPO of PayPal — and creating two dedicated and
highly-focused independent businesses — will provide the best
opportunity for these businesses to remain competitive over the
long-term," said Icahn, who owns more than 2 percent of eBay.
EBay bought PayPal for $1.5 billion in 2002.
The billionaire Icahn said eBay and PayPal could enter into a
long-term commercial contract that does not require eBay to own all
of PayPal, to preserve their ties.
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He also said PayPal has a significant opportunity to offer new
services such as check writing and direct deposits.
A standalone PayPal and eBay would benefit from having their own
independent management teams, Icahn argued.
PayPal needs to be independent to compete in the mobile payments
industry, Icahn said, repeating an assertion he has frequently made
in a series of open letters in recent weeks.
(Reporting by Phil Wahba in New York; editing by Andrew Hay and Tom
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