Icahn says eBay investors lost $4bn on Skype
in New York
Monday 10 March 2014
The activist investor Carl Icahn has stepped up his attack on eBay, claiming the company’s chief executive, John Donahoe, oversaw a premature sale of Skype at a price that resulted in shareholders losing more than $4bn (£2.4bn).
Mr Icahn, who owns roughly 2 per cent of eBay’s shares, reiterated up his main assertion that the auction site eBay and the payments company PayPal should be split into two.
“It is my firm belief that if this occurred, there would be a number of bidders willing to pay a large premium for an independent PayPal,” Mr Icahn said in a letter to eBay shareholders.
He said he believed that if PayPal was left as a division of eBay, it could “well go the way of other former technology greats such as Blackberry, Dell, Eastman Kodak, Polaroid, Nintendo, Xerox, Sony, Palm, and AOL – the same way that Motorola Mobility may have gone had we not been able to convince Motorola’s board to bring in a new chief executive and separate the companies – ultimately resulting in a sale to Google.”
Mr Icahn also tweeted: “We believe based on evidence we have newly uncovered that Donahoe’s incompetence cost eBay holders over $4bn.”
Meanwhile, eBay rejected Mr Icahn’s nomination of two of his employees, Daniel Ninivaggi and Jonathan Christodoro, to the eBay board, saying the two “are not qualified candidates” and urging shareholders to vote against them.
Richard Schlosberg, an independent eBay director, said: “The corporate governance and nominating committee gave serious consideration to the two employees of Carl Icahn that he nominated to the board.
“After careful review, the board concluded that they are not qualified candidates based on the criteria that have consistently been applied by the committee, including in particular that neither nominee has relevant experience or expertise.”
Mr Icahn has been fighting with eBay management through letters and public statements since January, when the billionaire made his first proposal for eBay to spin off PayPal.
The company has said repeatedly that PayPal and eBay are better off as part of the same company.
In his letter to shareholders, Mr Icahn launched his strongest attacks yet on eBay’s corporate governance.
He wrote: “Who can doubt that if eBay were a private company, Donahoe would be fired when the facts were disclosed to the owners?
“But sadly at many of our public companies, such as eBay, there is a lack of accountability, and transgressions by management are swept under the rug by crony boards.
“If middle management makes a costly error, they pay the price; if the CEO makes one, too often the ‘old boy’ board covers it up and gives him a bonus.”
EBay called Mr Icahn’s comments “false and misleading”. “In pursuit of his own profit motives, Carl Icahn has made another unsubstantiated attack on John,” an eBay statement said.
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