According to reports, eBay is in settlement talks with activist investors in the hopes of avoiding a proxy fight on the online marketplace. Citing sources familiar with the matter, Bloomberg reported that eBay has been meeting with Elliott Management and Starboard Value to discuss board seats for representatives of the hedge funds, as well as a possible review of eBay’s operations.
Last month, a letter sent by Elliott advised eBay to sell both StubHub and its classified ads business so it could focus on its online retail marketplace. Elliott, which holds a 4 percent stake in eBay, also claimed that the eCommerce giant has misallocated resources, spent wastefully and operated under an inefficient structure in the past.
“Elliott believes that eBay is worth far more — but change is urgently needed to address both public perceptions and real business issues,” the company said in prepared remarks at the time, explaining that all three businesses could function more efficiently and profitably as separate entities.
The eCommerce giant has struggled on the market over the past year, with its stock price down 22 percent. However, according to Elliott, eBay could see its valuation grow to between $55 and $63 per share by the end of 2020 if it focuses on its core retail business.
Furthermore, eBay currently has a market valuation of more than $31 billion, with its marketplace making $2.1 billion in the third quarter of 2018, StubHub generating $291 million in sales and the classifieds division earning $254 million. Elliott estimated that the classifieds group could sell for anywhere between $8 billion and $12 billion, while StubHub could fetch between $3.5 billion and $4.5 billion. The activist investor also projected that eBay’s marketplace could get about $15 billion if it was sold — even without any operational improvements.
The parties are hoping to reach an agreement before Friday (March 1), the deadline for nominating directors, to avoid a proxy fight.