EBay and Icahn Continue Public War of Words
It’s been an interesting week for eBay (NASDAQ:EBAY) and Carl Icahn, having fired shots at each other since Icahn issued a letter to eBay’s shareholders at the beginning of the week calling for major changes to eBay’s board and for PayPal to be spun off. That letter was followed by two more in three days as eBay issued its own statements to defend itself and its board members.
Icahn’s latest letter, which was sent to eBay shareholders and posted on Thursday, reiterates his previous claims that board members Marc Andreessen and Scott Cook are involved in various businesses that represent conflicts of interest and so should step down from eBay’s board. Icahn also believes that PayPal needs to be spun off in order for eBay and its shareholders to unlock the popular service’s true potential.
“We believe creating two dedicated and highly focused independent businesses would provide employees and stockholders the best opportunity to remain competitive over the long term,” Icahn said in his first letter to eBay’s shareholders. He believes that the businesses are too different for PayPal to reach its full potential as a part of eBay. Separating PayPal from eBay would encourage eBay competitors like Amazon (NASDAQ:AMZN) and Wal-Mart (NYSE:WMT) to adopt PayPal’s service and foster PayPal’s growth, according to the investor.
Icahn again calls out Andreessen and Cook for their involvements in businesses that compete with PayPal. “In our opinion, having Mr. Cook on the board while planning PayPal’s future is akin to having Pete Carroll, coach of the Seattle Seahawks, sitting in when the Denver Broncos were constructing their game plan for the Super Bowl,” the letter reads. Cook has an investment in PayPal competitor Intuit. It also backs previous assertions that eBay lost out on $4 billion when Skype, which was owned by eBay, was sold to Andreessen’s Silver Lake Management and then sold for a huge profit to Microsoft (NASDAQ:MSFT).
In a response to Icahn’s letter, eBay claimed that, “The company explored all options for divesting Skype” and pointed out that “because Mr. Andreessen’s fund had a small stake in the acquiring group, Mr. Andreessen was recused from all decision making.” The company also said that Icahn “has cherry-picked old news clips and anecdotes out of context to attack the integrity of two of the most respected, accomplished and value-driven technology leaders in Silicon Valley.”
“EBay states the conflicts regarding Mr. Andreessen’s investments are acceptable. Mr. Andreessen has funded, sits on boards of, and advises no less than five competitors, four of which directly compete with PayPal — all the while potentially having access to nonpublic information regarding PayPal’s operating performance. Based on our research, Mr. Andreessen’s actions are by far an outlier on public markets — even for technology company boards,” Icahn said in the most recent letter.
EBay founder, chair, and largest shareholder Pierre Omidyar has issued his own statement backing up the company, its board members, and the decision to hang on to PayPal. “A new eBay shareholder, Carl Icahn, is making unsubstantiated claims about our company — and deliberately impugning the integrity of our directors,” Omidyar said. “Instead of having an honest discussion about a reasonable question, Mr. Icahn has chosen to attack the integrity of two highly respected and qualified board members, Scott Cook and Marc Andreessen. He also has attacked the integrity of our CEO John Donahoe.”
EBay responded in its own statement on Wednesday titled “Stick to the Facts, Carl.” In it, the company said, “Carl Icahn doesn’t let the truth get in the way of a good story. And while his letters and media interviews may be entertaining, they are not factually accurate. In fact, Mr. Icahn seems to be deliberately disseminating claims that are dead wrong. The claims against Mr. Cook and Mr. Andreessen, in particular, are blatantly false. We challenge Mr. Icahn to end his own charade with our shareholders.”
Icahn says that CNBC has offered a forum for eBay executives and Icahn to have a public debate, and that he would be happy to take part in a debate should eBay agree to it. “EBay has challenged us to focus on honest, accurate debate. We do not believe eBay is serious about this,” Icahn said. “At this moment, not surprising to us, eBay has not responded. We eagerly await their reply.”
Given the strong words that have already been exchanged between the two parties, a public debate will be entertaining at the least, even if the sides are too polarized to come to any sort of agreement.
More From Wall St. Cheat Sheet:
- Icahn’s Battle With eBay Will Only Get Uglier
- Icahn Rips eBay Board a New One in Latest Letter
- EBay Says No to Icahn Proposal
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