Skip to main content

Hedge funds Elliott Management and Starboard Value have taken stakes in ebay Inc. and urged changes at the e-commerce platform including the sale of some of its businesses, which could release billions of dollars in capital.

In a letter sent to the company’s board, Elliott asked eBay to hive off ticket-sales franchise StubHub and eBay Classifieds Group from its core marketplace as part of a five-point plan to double the company’s value.

Separately, a source familiar with the matter told Reuters that Starboard had also taken a significant stake in the platform and was pushing for changes including asset sales.

Story continues below advertisement

Shares of eBay, which lost a quarter of their value last year as it lost market share to Amazon.com Inc. and other online competitors, rose as much as 12.1 per cent to US$34.75 in response and were on course for their best performance in a year.

Elliott, which owns a stake of more than 4 per cent in eBay, said the company could raise its value to $55-$63 a share by 2020 if it implemented the restructuring plan.

EBay said it would review Elliott’s proposal, and is looking forward to engaging with the hedge fund.

Starboard did not respond to a request for comment.

The San Jose, Calif.-based company has been splurging on product development, brand marketing and website design, while also cutting jobs.

Elliott said StubHub on its own could be worth $3.5 billion to $4.5 billion and eBay Classifieds, which could be sold or spun off, between US$8-billion and US$12-billion.

The shareholder also detailed a plan for operational improvement, including a roughly US$250-million increase in operating expenses from 2018 to 2021.

Story continues below advertisement

“While we believe that execution missteps and unclear focus have impaired value, eBay is far from broken, and its future should be bright,” Elliott’s Jesse Cohn wrote, adding that his mother had built a successful business on eBay by selling jewellery for over a decade.

DA Davidson analyst Tom Forte said he agreed that restructuring could create more value for shareholders.

Elliott said its plan earmarked 20 per cent of free cash flow on an ongoing basis, or US$600-million to US$700-million, for annual investment in acquisitions of companies or technologies.

It called for an initial meeting with the board to discuss its concerns and for the establishment of a strategy and operations committee to execute the improvement plan.

“[EBay] has been primed to see activist intervention for some time now,” Benchmark Co analyst Daniel Kurnos said.

“The general consensus is that a true cleanup is needed.”

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter