Icahn's latest tip: eBay should sell 20 percent of PayPal via IPO

Icahn's latest tip: eBay should sell 20 percent of PayPal via IPO

Summary: The American business magnate published yet another open letter to eBay shareholders on Wednesday.


Carl Icahn won't give up on nagging eBay over selling PayPal (among many other things), but a new suggestion demonstrates he might be backing down -- albeit slightly.

The American business magnate published yet another open letter to eBay shareholders on Wednesday, outlining a scheme in which eBay sells off 20 percent of PayPal through an initial public offering.

As described by Icahn, the online marketplace conglomerate would then be able to keep the majority of PayPal.

Aside from the rather lengthy proposal, Icahn reiterated his disappointment (to put it lightly) in eBay's leadership:

Over the last few weeks, we have raised a number of troubling questions regarding corporate governance at eBay. Sadly, in our opinion, these questions have never been adequately answered by eBay. Now, we have given a basic overview of the reasons we believe a 20% IPO of PayPal could be advantageous for the companies, employees and stockholders. We hope that eBay’s management is paying attention and decides to respond to this first message on the topic in a productive, transparent manner.

Icahn concluded by stressing he believes in the value of PayPal, but warned "it is on the verge of going to war against strong adversaries, and only with the benefits of being an independent company, as described above, will PayPal be capable of winning that war."

This new suggestion regarding the future of the digital payments brand is only the latest incursion between eBay and Icahn's inventment group empire.

The trouble with eBay started in January amid the company's fourth quarter earnings report. At the time, Icahn suggested (putting it mildly) that PayPal should be spun off.

Ebay didn't agree.

By the end of February, Pierre Omidyar, founder and chairman of the board of eBay Inc., published a pointed letter rebuffing Icahn's public criticism of eBay CEO John Donahue as well as two prominent shareholders, venture capitalist Marc Andreessen and Intuit founder Scott Cook.

Since then there has been a flurry of public memos and outbursts volleyed back and forth, including one by Icahn arguing that Icahn that Andreessen had too many conflicts during the Skype sale, putting up his reputation for further scrutiny.

Then last week, eBay took things to a new level in a filing with the U.S. Securities and Exchange Commission, urging shareholders to ignore both Icahn's nominees for the board of directors while encouraging them to re-elect CEO John Donahoe and director Fred Anderson.

Topics: E-Commerce, Apps, Enterprise 2.0, Tech Industry

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • Get a life

    I don't understand, doesn't he have enough money?
    • That's the problem

      He has too much money and unfortunately that gives him a voice.

      People like this carpet bagger only have one thing in mind and that is to turns billions into more billions. He does not (or chooses to deliberately ignore) business strategy. If eBay sells off paypal then they turn a unified company with a strong business case into two companies with strong competitors but of course Ichan doesn't care - he just wants to make his next billion by raiding and selling.
      Best thing us to just ignore this capitalist and side with those who invent, develop, create, etc.
      • I want Icahn to

        Get his payouts in Paypal dollars and then cop a credit card chargeback 100 days down the track to know what it's like to be a high volume paypal customer. Splitting paypal from ebay would just make the situation worse as paypal will have less ability to correlate ebay data to decide on disputed cases.
  • Better advice

    Whatever Icahn says, don't do.
    Michael Alan Goff
  • Dear Mr Icahn

    If you think Paypal should be independent then why don't you go ahead and put your money where your mouth is and bankroll an independent payment processor and compete with Paypal?
    Paypal is vulnerable as you say so it should be a walkover.