EBay Inc. said it has reached an agreement with Elliott Management Corp. and Starboard Value, appointing two new directors and paving the way to potentially carving off some of its businesses.
Under terms of the deal, Elliott partner Jesse Cohn and Matt Murphy of Marvell Technology Group Ltd. will join the board. EBay also said it would undertake a strategic review of its portfolio of assets, including StubHub and the Classifieds Group.
After talks with the investors over the last two months, “we all share common ground: we see tremendous opportunity ahead and want to see EBay’s full potential realized over the long-term,” EBay Chief Executive Officer Devin Wenig said. “The initiatives we are announcing today are the result of this constructive dialogue.”
EBay’s shares jumped 5.2 percent, to 39.09, at 9:36 a.m. in New York.
Elliott, run by billionaire Paul Singer, disclosed a 4 percent stake in EBay in January. The New York-based hedge fund proposed a five-point plan to improve the company’s performance, including exploring a spinoff or sale of its ticket reseller StubHub and its classifieds business. The deal was struck ahead of a March 1 deadline for the activists to nominate directors at the company’s annual general meeting. Starboard Value has about a 1 percent stake in EBay.
The investors added to the pressure on Wenig, who took over EBay following its split with PayPal in 2015 with promises to return the online marketplace to prominence. The results have been slow-going and EBay continues to lose market share to Amazon.com Inc., which is growing faster. While EBay has launched marketing campaigns to expand beyond its base of mostly 50-year-old and older men, investors want more.
EBay’s shares could be valued at $55 to $63 if the company follows Elliott’s proposals, the hedge fund has said.
In the past three years, EBay has added 20 million new customers to reach 179 million and increased its inventory to 1.2 billion listings, up from 850 million. The company has also sold its stake in overseas online marketplaces such as Mercado Libre and Flipkart. The company is looking to increase revenue from its new payments business and by selling more advertising on the site.
The deal announced Friday builds on other measures EBay has taken in recent months, including introducing its first-ever dividend and committing to returning $7 billion in capital to shareholders over the next two years. The San Jose, California-based company is cutting 135 jobs and is consolidating geographic regions under one global leadership team.
Wenig has previously rejected the idea of selling StubHub and other pieces of the company. In the statement Friday, EBay said there is “no assurance that the strategic review will result in a sale, spin-off or other business combination.”
Cohn and Murphy will join the board immediately and EBay said it will add a third new independent director later in the year. EBay also said it will begin an operating review of its business and announce the findings at an event in the fall.