Icahn sells out of eBay and doubles down on PayPal
In 2014 Carl Icahn said “Over the last week I have had a number of conversations with John [Donahoe]. We both strongly believe in the great potential of eBay and PayPal, and I have found a number of his ideas to be extremely compelling. However, I continue to believe that eBay would benefit from the separation of PayPal at some point in the near future and intend to continue to press my case through confidential discussions with the company“.
This week it emerges that he demonstrated just how much eBay benefited from the separation of PayPal by dumping all of his eBay shares. He basically cashed his 46.3 million eBay shares in, converted his investment to PayPal shares and now has zero interest in eBay and a 3.8% interest in PayPal.
We all knew that Icahn’s interest was in PayPal so it’s no real surprise that he’s lost interest in eBay. The great news is that for marketplace sellers moving forward Icahn has ceased to be a thorn in the side of eBay and they’re now free of his interference to start growing the company again.
For PayPal it should send a warning, Icahn’s not done with you yet. Now PayPal has been spun off as a separate company he’ll be on the look out for a merger or acquisition to maximise on his investment. Carl Icahn is an activist investor, he’s not in the game to patiently wait for a company to grow and produce modest returns. He wants to disrupt a company and maximise shareholder investment in the shortest time possible.
I can understand Icahn’s view, why wouldn’t you want to make as much money as possible in the shortest time frame? Great for shareholders, perhaps not so great for the companies, their employees and their customers. The eBay board might be forgiven if they are breathing a sigh of relief that Icahn has raped, pillaged and moved on to pastures new and will bother them no more.
eBay shares are roughly level since the split, PayPal shares are down about a dollar.