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Just when you thought the very public war of words between activist investor Carl Icahn and eBay Inc. (Nasdaq: EBAY) was about to go nuclear, peace broke out.
Icahn and eBay Chief Executive Officer (CEO) John Donahoe announced a truce today (Thursday) in which the notorious billionaire would end his public bid to force eBay to split off its PayPal unit and grant him two seats on the company’s board.
In personal conversations over the past week, Donahoe and Icahn instead agreed to make CVS Caremark Corp. (NYSE: CVS) CEO David Dorman an independent director on eBay’s board. Dorman is also a founding partner of venture capital firm Centerview Capital Technology.
Both men issued statements as if they suddenly were the best of friends.
Note: You might think that activist investors, Big Banks and institutional investors have all the advantages – that there’s no way for the regular guy to “beat The Street.” But you can. Here’s how…
In several TV appearances, Donahoe shrugged off the nasty – and often personal - attacks from Icahn in recent months. At one point, Icahn wrote a letter to shareholders in which he said “Donahoe's inexcusable incompetence cost eBay stockholders over $4 billion," a reference to how the eBay CEO handled the sale of Skype.
But it was all sunshine and roses this morning.
"This is a clear win-win for shareholders," Donahoe told CNN International's World Business Today. "Carl saw the real long-term opportunity of keeping our company together."
While neither party specified what suddenly brought them together, the prospect of an ugly spectacle at eBay’s May 13 shareholder meeting probably helped motivate the truce.
But just because they’re making nice now doesn’t mean the two see eye to eye.
Icahn and eBay (Nasdaq: EBAY) Still Not Quite Besties
Icahn, who plans to retain his 2.2% stake in eBay, did note in his statement that he had not changed his mind, suggesting that he would now pursue a much less aggressive strategy.
"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," Icahn said.
“Confidential discussions” means that any future tussles over the fate of PayPal will happen away from the public spotlight. The activist investor agreed to lay off the public broadsides in exchange for unfettered access to board members and some company officers.
It was clear from what both Icahn and Donahoe said that they still disagree on whether PayPal should be separated from eBay, but they apparently recognized that the verbal fireworks had done nothing to resolve the issue.
The eBay battle adds on to what’s been a tough year for Carl Icahn’s activist investing strategies. Back in February, he relented in his attempt to force Apple Inc. (Nasdaq: AAPL) to carry out a $50 billion stock buyback.
Do you think Icahn will eventually succeed in convincing the eBay board to split off PayPal? Is that even a good idea? Sound off on Twitter @moneymorning or Facebook.
While Carl Icahn hasn’t had much luck in his quest to pry PayPal loose from eBay, he is right about one thing – the electronic payments sector is going to be huge. And there’s one company that’s ideally positioned to benefit…
Related Articles:
- The New York Times:
EBay Settles Board Fight with Icahn - CNNMoney:
Icahn Settles with eBay over PayPal
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.