Icahn, eBay Trade More Barbs

NEW YORK (The Deal) -- Carl Icahn and eBay  (EBAY) continued to trade barbs on Thursday, with the investor once again challenging the integrity of certain eBay directors while the company's founders and chairman came to their defense.

Icahn, who is pushing for eBay to spin off its PayPal unit, on Tuesday sent a letter to shareholders accusing eBay directors Marc Andreessen and Scott Cook of putting their personal financial interests ahead of shareholders. The investor, owner of 2% of eBay shares, also said that eBay CEO John Donahoe is "completely asleep" or "either naive or willingly blind to lapses by the board."

EBay in a response released Wednesday afternoon said "Carl Icahn doesn't let the truth get in the way of a good story," adding that Icahn "seems to be deliberately disseminating claims that are dead wrong."

Icahn returned with a new missive Thursday morning, with the investor accusing Donahoe, Andreessen and Cook of hiding behind "eBay's public relations machine" and inviting company officials to join him for a televised debate. Icahn repeated his accusation that Andreessen acted inappropriately when his venture fund participated in the purchase of Skype Technologies from eBay, only to flip it to Microsoft  (MSFT) 18 months later for a substantial gain.

But Icahn seemingly sidestepped eBay's defense of the noted venture capitalist, declaring that "Andreessen's group profited by about $4 billion in only a year and a half." EBay had noted that Andreessen's fund took just a 3% stake in Skype while eBay retained a 30% stake, noting that the company captured significantly more of the gain from the flip than Andreessen did.

EBay also insisted that Andreessen recused himself from all deliberations about Skype.

Icahn also continued his criticism of Cook, who is a founder and a board member of Intuit  (INTU) and a director at eBay. Icahn noted that eBay's $800 million deal to acquire Braintree Payment Solutions announced in September pushes it into more-direct competition with Intuit's payment processing operation.

The investor said it was "absurd" to say that Intuit and PayPal are not competitors, and referenced the Super Bowl to make his point. "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 (then again, maybe he did)," Icahn wrote.

The latest Icahn letter prompted a response from eBay founder, chairman and largest shareholder Pierre Omidyar, who in a separate letter to shareholders said Icahn "is making unsubstantiated claims about our company - and deliberately impugning the integrity of our directors."

Omidyar, owner of about 8% of the company's shares, said that Icahn's initial question about whether PayPal should remain part of eBay is a good one, and "it is a question our board has asked ourselves" before concluding that the two businesses are a good fit.

"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," Omidyar wrote.

The chairman repeated eBay's previous arguments on Andreessen and the Skype sale, and said Cook "has been an enormous asset to eBay's board for many years." Omidyar called the overlap between Intuit and eBay "small for both companies."

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