eBay Marketplace Sale possibility confirmed by eBay

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eBay have initiated a strategic review of its asset portfolio, including but not limited to StubHub and eBay Classifieds Group. That can be taken to include the possibility of an eBay Marketplace Sale, confirming the rumours we reported on earlier this week.

eBay today announced several new initiatives with “the goal of positioning eBay for ongoing success and value creation“. eBay say that they have worked collaboratively with Elliott Management, Starboard Value, and other significant shareholders on these initiatives, which include the addition of two new independent directors to the Board.

“Over the course of the last two months, we’ve met with a number of shareholders to understand their views. The bottom line is that we all share common ground: we see tremendous opportunity ahead and want to see eBay’s full potential realized over the long-term. The initiatives we are announcing today are the result of this constructive dialogue.”
– Devin Wenig, President and CEO, eBay Inc

What’s in it for sellers?

There’s lots of talk of ‘success and value creation’, ‘operating and strategic reviews’, and ‘eBay’s full potential’ but that’s all referring to investor value and returns.

Success is measured by different yardsticks depending if you’re an investor or a user of eBay. For sellers, success would largely be measured in more sales with a lower overall proportion of fees and to see GMV growing in double digits rather than the 0-2% predicted for 2019.

If you’re investor however, success and value means how much money can you screw out of eBay in the short term and the quickest and easiest way to get a return is to flog off the crown jewels, take your cut and run with little concern as to the long term success of the company. That may be unfair to investors in for the long haul, but it’s certainly true for activist investors looking for significant returns in a short space of time.

What sellers want to see from eBay is a long term strategy that works to build the marketplace, attract and retain buyers and deliver sales.

Measures eBay are taking

Operating Review

eBay announced today the initiation of an operating review, which will be led by the eBay management team and overseen by the Board of Directors. The operating review will target operational excellence and will build upon the recently announced reorganization and restructuring measures in order to drive enhanced revenue and operating income growth. eBay intends to announce the findings and targets from this review at an event in the Fall.

Strategic Review of Portfolio Alongside Advisors

eBay, with the assistance of external financial advisors, has initiated a strategic review of its asset portfolio, including but not limited to StubHub and eBay Classifieds Group.

Goldman Sachs & Co. LLC is acting as financial advisor to eBay, and Wachtell, Lipton, Rosen & Katz is acting as legal counsel.

There can be no assurance that the strategic review being undertaken will result in a sale, spin-off or other business combination involving eBay’s assets. eBay does not intend on making further public announcements regarding the strategic review unless and until the Board has approved a course of action requiring disclosure.

New Directors to eBay Board

In support of these strategic initiatives and consistent with its commitment to board refreshment, eBay will immediately add Jesse Cohn of Elliott and Matt Murphy of Marvell Technology to the Board of Directors. Further, eBay will add a third new independent director later in the year and continue to examine how the Board can maintain the appropriate mix of skills, qualifications and diversity of backgrounds to best represent the Company’s stockholders.

“We are confident that both Jesse and Matt will add valuable experience and perspective to our board, and we look forward to working with them to execute our strategy and best serve all our shareholders”
– Devin Wenig, President and CEO, eBay Inc

Cooperation Agreements

eBay has entered into a cooperation agreement with affiliates of Elliott, who hold more than a 4% economic interest in eBay. eBay has also entered into a cooperation agreement with affiliates of Starboard Value, who hold an economic interest of approximately 1% in eBay. Under the terms of their respective agreements, each of Elliott and Starboard have agreed to certain standstill, voting, and other provisions with eBay. The cooperation agreements will be filed on a Form 8-K with the Securities and Exchange Commission.

“Our discussions with Devin and the Board have been positive and productive, and we are pleased to have worked collaboratively to reach this agreement. We are confident that the initiatives announced today will drive meaningful shareholder value. Personally, I am looking forward to joining the Board and working with my fellow directors towards our mutual goal of positioning eBay for success and value creation.”
– Jesse Cohn, Partner at Elliott

“We are pleased with the changes underway at eBay and look forward to seeing the results of the Company’s announced operating and strategic reviews. We welcome the new directors to eBay and expect to maintain an ongoing and constructive dialogue with management and the Board.”
– Peter Feld, Managing Member of Starboard Value

10 Responses

  1. Quite the leap from what they’ve actually said.

    Great clickbait headline with no link to the actual report though. Fantastic journalism on this one guys.

    They didn’t in any way confirm the possibility of the sale of the marketplace.

  2. “It is an honour being considered for the task on hand, after always difficult negotiations I am delighted to see announced the decision to protect intellectual property and take into consideration new iniciatives, we will continue on the development of new products to increase volumes and boost revenue by innovating in the digital world”
    -New entrant

  3. Wenigspeak translation:

    “Over the course of the last two months, we’ve met with a number of shareholders to understand their views”
    Translation – We’re clean out of ideas, so let’s ask someone who might know their arse from their elbow.
    “The bottom line is that we all share common ground”
    Translation – The ship is sinking fast
    “we see tremendous opportunity ahead and want to see eBay’s full potential realized over the long-term”
    Translation – But not with me on board, hand me that life jacket
    “The initiatives we are announcing today are the result of this constructive dialogue.”
    Translation – Women and children first. Someone get my golf clubs from the hold. I’m off to GM full time.

  4. For what it’s worth, I think Chris is right. Wenig is preparing the ground to jump ship and Ebay may well be sold.

    Wenig began with making unintelligible and opaque statements which sounded good, but the truth is that life for sellers now is unpredictable and uncertain.

    Each seller release leaves some sellers wondering if they will even be able to sell on the platform any more.

    And the cost of selling keeps ramping up.

    Maybe someone can come in who will make Ebay relevant to buyers again and strip out the ludicrous complication of listing and the crazy rats nest of ever changing policies. There are at least four conflicting systems for rating seller performance.

    If this is Wenig’s swansong, I won’t miss his gobbledespeak jargon. The guy simply does not get what Ebay is about. And it shows.

  5. Elliott on the board of directors. What a bloody disaster. Fox in the hen house, quite literally.
    And to have Elliott as a part of the people to initiate review (as an independent director on the board too) pretty much places it into their court, making it entirely eBay/eBay’s boards fault if they refuse to recommend the fall review findings

    eBay CEO would do well to keep the raiders out. Failing that already (low share prices), have the decency to protect the sellers, from increasing fees (e.g. EU markets have started to remove fee caps – gotta be stopped). Milking us for the last drops of ads fees. Great.

    StubHub makes sense to be span off / if it’s valued less – but how much meat can you slice off before it adds pressure on the core business to succeed? And are the publicly traded companies increasingly not allowed to have stretegic assets in the shareholders primacy context? (Arguably even Google had to spin into Alphabet – and keep the moonshots slotted separately).

    Don’t get the stretegic review done, and accidentally get bought by Amazon. Please.

  6. years ago i attended one of their (very useful if pretentiously named) ‘university’ days.
    one of their staff said – don’t ever think you will make much money from eBay – but it is a superb way to advertise.
    they were right. that, and no more.

    the world moves on and – the parasites line up to manage the funeral.

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