This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

[video] The Deal: Icahn Prods eBay to Spin PayPal

NEW YORK (TheStreet) eBay (EBAY - Get Report) disclosed Wednesday a small stake taken by Carl Icahn and said the activist investor has proposed a spinoff of the e-commerce company's PayPal division.

Icahn also nominated two candidates to eBay's board of directors. His stake amounts to less than 0.82% of the company.

In a statement accompanying its fourth-quarter results, eBay said it rejected the overture, adding it did not believe breaking up the company was in the best interest of shareholders.

"Payment is part of commerce, and as part of eBay, PayPal drives commerce innovation in payments at global scale, creating value for consumers, merchants and shareholders," the company said.

San Jose, Calif.-based eBay said it would consider Icahn's board nominations "in the ordinary course of business."

Must Read: HBO Is 'Netflix Bitch'

Amid the disclosure, Wells Fargo Securities  analyst Matt Nemer suggested in a Thursday note that eBay should follow the example of John Malone's Liberty Media (LMCA) and consider a tracking stock.

"In our view, a tracking stock structure at eBay would immediately unlock incremental PayPal value, but would protect the meaningful synergies between [the Marketplaces auction unit] and PayPal," Nemer wrote.

Liberty Media has frequently created tracking stocks to reflect the value of its holdings, sometimes spinning them off.

Nemer said that, given the "highly disruptive competitive environments" in both businesses, the units are better as a whole.

"Marketplaces is battling Amazon in the midst of a massive e-commerce channel shift and PayPal is the clear early leader in payments but they play in a field of well-funded innovators," he wrote.

Ebay closed at $54.51 on Wednesday, and was falling 0.59% to $54.09 after being as high as $58.304 in pre-market trading Thursday.

Nemer values PayPal at $25.09, or 24 times non-GAAP earnings per share. His target for ebay as a whole is $73.03.

-- Written by Chris Nolter in New York

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
EBAY $23.98 -1.15%
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%
TSLA $232.32 -3.92%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs