New York Stock Exchange owner International Exchange (ICE) said it is no longer going to pursue plans to potentially purchase eBay after investors strongly fought back against the move, according to a report in The Wall Street Journal.
After markets closed Thursday (Feb. 6), ICE said it discussed the potential purchase in an early morning earnings call with investors, which didn’t necessarily stop a slide in share value for ICE.
On Thursday, ICE shares dropped 3 percent and were down as much as 6.5 percent. The stock was already down 7.5 percent on Tuesday, and the company lost $5 billion in market value.
The potential deal was announced Tuesday, and it could have valued eBay at $30 billion, about 10 percent above eBay’s closing price at the time the deal was reported.
The two companies had reportedly been in talks before about a deal. ICE was possibly looking at using its own technology to connect buyers and sellers on its site.
On Wednesday, ICE said it “approached eBay to explore a range of potential opportunities that might create value for the shareholders of both companies,” adding “eBay has not engaged in a meaningful way.”
Activist investor group Starboard Value recently sent eBay a letter saying that eBay should sell its online classified unit, and the group helped to persuade eBay to get rid of StubHub last year for $4.05 billion.
In a letter, Starboard said eBay should pay more attention to its core business.
“For much of the last year, the Company attempted to rationalize maintaining the current portfolio structure by alluding to the fact that eBay gains ‘a few hundred million dollars’ worth of trade’ by having Classifieds in the eBay portfolio,” the letter said. “While that is a compelling soundbite, when we apply the core Marketplace take rate to that value, it becomes inconsequential, especially in comparison to the potential value creation opportunity. In fact, an argument could be made that in the current structure, Classifieds is actually owned by a competitive business, hindering both the core Marketplace business and Classifieds.”