eBay To Conduct Strategic Reviews, Could Spin Off StubHub

Under pressure from activist investors Elliott Management and Starboard Value, eBay Inc EBAY announced Friday it would pursue strategic initiatives. The initiatives will include a strategic review of assets, an operating review, and the addition of two new independent board members.

What Happened

EBay will evaluate assets including StubHub and eBay Classifieds Group, and the board will welcome Elliott Management partner Jesse Cohn and Marvell Technology’s Matt Murphy. A third independent director will join later in the year.

Management has been working with the Board of Directors on the strategic initiatives since late 2018. Recent fruits include the January introduction of a quarterly dividend with plans to return $7 billion in capital to shareholders through 2020.

Additionally, eBay will consolidate its regional Marketplace segments under a global leadership team to streamline operations. Management has also begun investing incrementally in payments and advertising.

Why It’s Important

EBay President and CEO Devin Wenig said the initiatives were prompted by dialogue with shareholders — specifically, with activist investors.

Both Starboard Value and Elliott Management boast successful pressure campaigns with other public targets.

Starboard has had a hand in the trajectories of Darden Restaurants, Inc. DRI, Yahoo and Marvell Technology Group Ltd. MRVL. Last year, it won the most public board seats of any activist. Elliott has influenced the course of athenahealth and Sky, among others, but its 22 campaigns launched last year posted a success rate of just 62 percent.

Notably, eBay entered into cooperation agreements with both parties settling “certain standstill, voting, and other provisions,” according to the press release.

What’s Next

EBay will announce the findings from its operating review in the fall and release its cooperation agreements in an upcoming 8-K filing. Updates on the strategic review of assets will not be announced until the board has approved action.

EBay's stock traded up 3 percent to $38.30 per share at time of publication.

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