Icahn: eBay could spin off 20% of PayPal in an IPO

In a twist on his ongoing calls for eBay (EBAY +0.2%) to spin off PayPal, Carl Icahn argues the company would benefit from selling a 20% stake in the online payments giant through an IPO - a move similar to the one EMC carried out with VMware in 2007.

Icahn sees an IPO not only unlocking value due to the lofty valuation the Street might assign to PayPal, but also by giving PayPal's management more independence (previous) and creating "a valuable currency" that could be used for M&A and attracting talent.

The activist investor also notes a 20% IPO would allow eBay to maintain the synergies between PayPal and Marketplaces CEO John Donahoe has argued justify keeping the businesses under one roof, and thinks it would eliminate "dissynergies" he believes have prevented PayPal from pursuing strategic partnerships with financial and Internet giants.

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Comments (5)
  • Bear Bait
    , contributor
    Comments (944) | Send Message
    .....and Icahn makes a shit pot full of money and to hell with everyone else..............
    19 Mar 2014, 01:56 PM Reply Like
  • IEP
    , contributor
    Comments (2) | Send Message
    Why the delay is beyond reason. Yes, I agree with Mr. Icahn. PayPal and ebay could both benefit greatly by taking PayPal public IPO. The problem is ebay management is boastful about earnings and ROI and looking at the past. Paypal is fluid as like a currency, what it is worth today is not it's worth tomorrow. Paypal needs a General Patton...Push Forward! JL
    19 Mar 2014, 02:42 PM Reply Like
  • Seeker137
    , contributor
    Comments (426) | Send Message
    The FTC must investigate Paypal and must regulate it as banks are regulated.
    *Paypal operates like a bank but is not subject to any regulation as banks are.
    *Paypal is not FDIC insured.
    *Paypal uses deposits to make loans and collect interest, but does not pay interest on these deposits.
    *Paypal holds deposited funds with little or no notice, leaving depositors with no access to their money for 21 days and in some cases several months.
    *Paypal reaches into linked bank accounts and credit cards to hold funds if they deem there are insufficient funds in the Paypal account. This cannot be legal and should be investigated and regulated. This money belongs to depositors, not Paypal.
    *Twenty one day holds on funds (and sometimes longer) is a terrible hardship on small merchants trying to struggle through the recession.
    *In addition, one seller wrote that ten percent of his earnings are held for 6 months by Paypal! It's his money. How can this be legal?
    *Sellers have no appeal process regarding the holds on their money. It often happens so rapidly they cannot prevent it./safeguard their own money.
    * Paypal fees can exceed ten percent of transactions.
    *There is no exact competition, Paypal is a virtual monopoly.
    These are unfair and unethical business practices. Banks are regulated. Paypal operates as a global bank. The FTC must investigate Paypal and must make Paypal subject to banking regulations, since it operates as a bank. Oversight is required.
    19 Mar 2014, 04:08 PM Reply Like
  • Illuminati Investments
    , contributor
    Comments (9627) | Send Message
    Spinning off VMW didn't really unlock value at EMC, so why would we expect spinning off PayPal to do so with EBAY?
    19 Mar 2014, 08:10 PM Reply Like
  • goonsquad
    , contributor
    Comment (1) | Send Message
    This is a very good point seeker, but do you actually believe for two seconds PayPal was built for what it is being used for at this very moment? P2P transactions is paypals bottom line, right now they are working out the inefficiencies of their mechanism and I would bet on its systemic virtue being revealed in the next few years here.
    20 Mar 2014, 09:15 AM Reply Like
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