eBay is nearing a settlement with shareholders Elliott Management and Starboard Value LP that would give each of the activist investors a board seat, with the possibility of another one in the future, according to a report from The Wall Street Journal.
eBay’s board already has 13 people on it, and Elliott partner Jesse Cohn, the chief of the hedge fund’s U.S. practice, will probably join the eBay board as a stipulation of the deal. The other person is predicted to be a Starboard nominee, but not a hedge fund employee.
Since 2004, Cohn has grown Elliott’s tech investments and is currently on the board of Citrix Systems. The settlement has other stipulations as well, including a call for a review of eBay’s profitability and a look at the company’s portfolio, with the intention of figuring out whether to separate and sell business units.
The deal is not guaranteed, however, and all parties continue to negotiate. If no deal is made, the activists have until the end of the week to try and get board seats through a proxy fight.
Elliott, founded by billionaire Paul Singer, said the company needs to quickly change things to recharge its business, arguing that the latest financial results confirm this view. Shares of eBay are down an estimated 18 percent over the past year.
“eBay’s fourth-quarter earnings provided another example of why the company needs to significantly improve operational execution and focus on its core marketplace business,” Elliott, which owns more than 4 percent of eBay, wrote in a letter on Jan. 31. “Despite a rapidly growing eCommerce market, eBay once again lowered marketplace growth expectations to a paltry 1 percent for 2019.”