Activist shareholder eBay wants a major review of its business operations

Elliott Management, an activist shareholder with a stake of more than four percent in eBay, has written a comprehensive letter to the company’s board. In it, Elliott calls on eBay’s board to dispose of a number of its activities.

As far as Elliott Management is concerned, it is time for eBay to refocus on its core activities. This is the marketplace that it itself offers worldwide. Other services, including Marktplaats and StubHub, should be split off so that the focus is on what really matters to the company.

Five steps

Elliott Management believes that eBay can work much more efficiently. By focusing more on one’s own marketplace, the company can save costs, among other things. In addition, a considerable amount of capital could be distributed to shareholders. To do so, Elliott has specified five steps:

1. Rethink your portfolio: eBay has a broad portfolio with various valuable objects. The company must not only get more value out of this, but also separate the objects from eBay, so that the management can once again focus on the core of its business.
2. Revitalising eBay’s own marketplace is strategically very important, but according to Elliott it has been mismanaged for too long. It is time for management to focus solely on growing and strengthening this core activity.
3. Operational improvements: eBay has an inefficient business structure and therefore spends too much money. By working more efficiently, the company can invest more in activities that increase turnover.
4. Paying out capital: eBay is making significant profits and could therefore transfer more money to its shareholders.
5. Effective leadership: eBay needs to ensure that the most experienced talent is in the right place, so that operational improvements can be implemented in the best possible way.

Part of Elliott Management’s proposals is to split off Classified Groups. The industry is worth $4.5 billion under eBay sun, but could generate between $8 and $12 billion if it operates independently. The Dutch marketplace and the German mobile.de are also part of this group.