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Icahn changes his mind

by on20 March 2014

Only wants a partial IPO of Paypal

Activist investor Carl Icahn has changed his mind about encouraging eBay to spin off Paypal. Now he wants eBay to sell 20 percent of its PayPal payments unit in an initial public offering. Icahn thinks that PayPal is undervalued as part of eBay.

In recent weeks, Icahn has sent a series of open letters critical of eBay Chief Executive John Donahoe, the board, and corporate governance at the e-commerce company. Now he thinks that selling off only part of PayPal would retain the benefits of a stand-alone PayPal while maintaining the efficiencies of having eBay and PayPal together.

eBay said in a statement, re-iterating its position that the two businesses are better off under the same umbrella. It said that a partial separation of PayPal was not a new idea but it was glad that Icahn had got the message that selling the money outfit was silly.

Icahn said that as a public company, the payments firm should also command a higher valuation than as part of a larger corporation, shedding the "conglomerate discount," Icahn said. Its stock could then also be used to bankroll future acquisitions.

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