Starboard, Elliott Management Call on eBay to Shed StubHub, Classifieds

By Cara Lombardo and Kimberly Chin

EBay Inc. is being circled by a pair of activist investors who want the online marketplace to consider parting ways with its StubHub ticketing and classified-ads businesses.

Elliott Management Corp. announced Tuesday that it has a more than 4% stake in eBay and urged the online marketplace to consider spinning off or selling StubHub and the classifieds business because they could be worth more on their own.

Another hedge fund, Starboard Value LP, also has a large position in eBay of less than 4% and has spoken to the company about those same changes, according to a person familiar with the matter.

Starboard took the stake at least six months ago and has been talking to the San Jose, Calif.-based company in recent months about improving its operations and potentially separating the two businesses similar to the way it previously spun off payment platform PayPal Holdings Inc., the person said.

Through Friday, eBay shares were down about 20% over the past year. They jumped 8.6% to $33.68 in early trading Tuesday on news of the two activists' involvement. The company has a market value of roughly $30 billion.

In a letter sent Tuesday to eBay's board, Elliott also said eBay should focus on revitalizing its core marketplace business, make operational improvements to improve its margins and ensure it has the right leadership team in place.

Elliott says in the letter that eBay created a unique forum to match buyers and sellers, but has failed to take advantage of more sales moving online. Elliott partner Jesse Cohn notes his own mother has sold jewelry on the website for over a decade.

StubHub, which eBay bought in 2007 for $310 million, accounted for about 14% of eBay's more than $2 billion of revenue in its third quarter last year. Its classified business made up about 12%. The company is set to report its fourth-quarter results next week.

EBay has attracted activists in the past. Billionaire investor Carl Icahn showed up in eBay's stock in 2014 and urged a breakup. Following its own review, eBay spun out PayPal, giving each eBay holder a new share in PayPal, which is now itself a company worth more than $100 billion. Mr. Icahn sold out of his eBay position soon after the split and last year exited his stake in PayPal, with it having roughly doubled in value since the spinoff.

Write to Cara Lombardo at cara.lombardo@wsj.com and Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

January 22, 2019 10:26 ET (15:26 GMT)

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