EBAY eBay Inc

By Cara Lombardo and Laura Stevens 

EBay Inc. is being circled by a pair of activist investors who want it to consider parting ways with its StubHub ticketing and classified-ads businesses, a move that would mark the company's second major fracturing in recent years.

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 San Jose, Calif.-based 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 eBay in recent months about improving its operations and potentially separating the two businesses similar to the way it spun off payment platform PayPal Holdings Inc. in 2015, the person said.

Through Friday, eBay shares were down about 20% over the past year. They jumped 5.8% to $32.79 in afternoon trading Tuesday on news of the two activists' involvement. The company has a market value of more than $30 billion.

EBay said in a statement that it values its shareholders' input and will carefully review Elliott's proposals.

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 also suggested that eBay's core marketplace, if separated from its other businesses, could be sold to a private-equity firm or a strategic buyer eager to expand its online footprint.

Elliott said in its letter that eBay had created a unique forum to match buyers and sellers but has failed to take full advantage of the growth in e-commerce. Elliott partner Jesse Cohn noted that 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. The classified business made up about 12%. The company is set to report its fourth-quarter results next week.

EBay has struggled to secure its footing as a marketplace since its split with PayPal, a move also demanded by activist investors.

The company has worked to shed its image as an online garage sale, trying to get the message out that most of what is sold on its site is new and at a fixed price. In that effort, it has launched major advertising campaigns and hired consumer influencers such as supermodel Karlie Kloss. It has also pushed to improve what is sold on its site, while making it easier for users to search for products and do comparisons while shopping.

Those initiatives have helped eBay show signs of growth over the past few quarters, including a rising number of users and sales volume.

Still, the company is locked in a tough battle as shoppers and merchants continue their march toward major rival Amazon.com Inc., which now commands roughly half of all online sales in the U.S. Late last year, eBay sued Amazon, alleging its rival has been illegally poaching sellers via its internal marketing tool.

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. The payments company is now 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.

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Kimberly Chin

contributed to this article.

Write to Cara Lombardo at cara.lombardo@wsj.com and Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

January 22, 2019 14:48 ET (19:48 GMT)

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