Activist Investors, eBay Nearing Settlement That Sets Stage for Possible Change

Activist Investors, eBay Nearing Settlement That Sets Stage for Possible Change


A sign outside eBay’s company's headquarters in San Jose, Calif., in 2017.

A sign outside eBay’s company’s headquarters in San Jose, Calif., in 2017.


Photo:

David Paul Morris/Bloomberg News

Online marketplace

eBay
Inc.


EBAY0.11%

and activist investors Elliott Management Corp. and Starboard Value LP. are nearing a settlement deal that would give the activists board seats and could open the door to the company breaking itself up.

The three parties are discussing a deal in which Elliott and Starboard would receive multiple board seats, according to people familiar with the matter. The company would also agree to perform an operational review focused on improving profitability and a full-company strategic review—which is expected to involve considering a range of potential sales or spin offs of units and a sale of the core company, the people said.

A deal isn’t guaranteed—the activists and the company are still working through some issues that could cause the talks to fall apart, according to people familiar with the matter. If a deal isn’t reached, Elliott and Starboard have until March 1 to seek board seats through a proxy fight, though companies in active discussions with investors sometimes agree to extend the deadline to allow more time for negotiation.

Elliott disclosed a more than 4% stake in eBay in January and said in a letter to its board of directors thatthe company should spin off or sellits StubHub ticketing business and its classified-ads businesses. It also called on the company to revamp its core marketplace business, boost margins and ensure it has the right leadership in place. It also suggested that eBay’s core marketplace, if separated from everything else, could be sold.

Another activist hedge fund, Starboard Value LP, also has a stake in the company and has also urged it to consider splitting apart its businesses, The Wall Street Journal previously reported.

In recent years, eBay shares have languished as the company has sought todistance itself from its reputation as an online auction houseand battled the likes of

Amazon.com
Inc.

in the e-commerce arena.

EBay last month said it wouldpay a 14-cent dividendin March, its first ever. Overall, the company said it would return about $7 billion to shareholders through dividends and buybacks over the next two years, with $5.5 billion of that happening this year.

Shares of the company were recently down 3 cents to $37.32.

Write toCara Lombardo at[email protected]and Dana Cimilluca at[email protected]

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