Online marketplace eBay has agreed to review its StubHub and eBay Classifieds businesses, as well as appoint two new directors to its board, to avoid a proxy fight with activist investors.
The firm had been in talks this week 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. On Friday (March 1), eBay agreed to add Jesse Cohn, who heads up Elliott's U.S. equity activism practice, and Matt Murphy, CEO of Marvell Technology and a nominee of Starboard, to its board.
In addition, eBay will add a third new independent director later in the year.
Cooperation agreements with Elliott and Starboard Value were also signed, with both investors promising to standstill agreements such as voting along with management.
“Over the course of the last two months, we’ve met with a number of shareholders to understand their views,” eBay Chief Executive Officer Devin Wenig said in a statement, according to Reuters.
The settlement has other stipulations as well. It calls for a review of eBay’s profitability and a look into the company’s portfolio in an effort to figure out whether to separate and sell business units. Both investors have been pressuring eBay to look into selling 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 at the time, adding that all three businesses could function more efficiently and profitably as separate entities.
Shares in eBay rose 5 percent to $39 in early trading after news of the agreement.