EBay and Paypal are going to be stronger together, on Tuesday eBay issued a statement to its shareholders urging them to veto Carl Ichan’s spin off proposal.
In the statement to its shareholders, eBay reemphasized the five essential reasons eBay benefits from its partnership with PayPal. Which include: 1. PayPal grows faster because of eBay; 2. the company accelerates PayPal’s success; 3. data sharing leads to more profitable growth; 4. eBay provides sufficient capital for PayPal; 5. commerce and payment platforms are converging.
The board of directors wrote in a letter to its shareholders saying, “Our shareholders and our customers are best served by keeping PayPal and eBay together, no other payments competitor has achieved PayPal’s success, because no other competitor has held a commerce platform like eBay.”
A week ago, Ichan asked eBay to sell 20 percent of the PayPal payments unit in an initial public offering, his initial proposal called for a complete spin off.
Icahn who owns 2 percent stock in eBay, believes that selling off only part of PayPal would enable eBay to retain the benefits of a stand-alone PayPal, while still maintaining the efficiencies of having eBay and the payments unit together.
The board of directors at eBay has closely investigated activist investor Carl Ichan’s proposal for a spin off and decided its not in the best interest of the company.
Icahn has recently nominated two of his employees: Jonathan Christodoro and Daniel Ninivaggi, to sit on the eBay board of directors.
Carl Celian Ichan is an stockbroker on Wall Street and he is the majority shareholder for Ichan Enterprises.
Paypal is e-commerce business that allows it users to send money transfers and make payments over the internet. In 2002, eBay purchased PayPal for $1.5 billion as a publicly traded company and wholly owned subsidiary of eBay.
eBay and Paypal Are Stronger Together, Shareholders Urged to Veto Ichan’s Spin Off.