eBay Starboard Value

eBay issued a statement in response to the letter the board received from Starboard Value LP. The marketplace is pushing back at Starboard’s complaint about not working aggressively to streamline the company (sell-off the classifieds group) and focus on the core marketplace business.

eBay Statement on Starboard Letter

The eBay Board of Directors includes a director jointly nominated and agreed upon with Starboard, a representative of one of our largest shareholders, Elliott Management, and other strong, experienced and independent directors. The Board and eBay’s management team are aligned in their commitment to taking all appropriate steps to drive the value of the Company. Our Board and management team have implemented changes based on investor input and have taken significant actions to deliver long-term shareholder value and strengthen the business. Through that lens, we will review Starboard’s letter and perspectives as we continue to rigorously review our business and opportunities for growth and value creation.

In 2019, we made a number of decisions to enhance value that led to positive results and positioned the Company for future growth, including:

  • Delivering on our financial commitments – results were at the high end or better than our January 2019 full year guidance – including growth of Organic FX-Neutral revenues, non-GAAP EPS, and Free Cash Flow
  • Scaling growth initiatives – accelerated our Managed Payments transformation in the US and Germany while tracking towards $2 billion of revenue and $500 million of operating income in 2022 and doubled Promoted listings Advertising revenue in 2019 to nearly $400 million
  • Delivering better margins – delivered 2 points of margin improvement in 2019 enabling 1 point of reinvestment in Payments and Advertising; announced 2 points of additional operating margin by 2022, taking total operating margin rate to at least 30%
  • Returning significant capital to shareholders – implemented our first ever dividend while repurchasing $5.0 billion of common stock in 2019, bringing the total shares repurchased since July 2015 to 35%, returning over 150% of Free Cash Flow
  • Executing on portfolio transformation – performed a strategic business review resulting in an agreement to sell StubHub to viagogo for over $4 billion in cash and are on track to share an update on Classifieds mid-year 2020
  • Refreshing Board with investor perspectives –added two new independent directors within the past year to our experienced, focused and deeply engaged Board, including a director jointly nominated and agreed upon with Starboard and a representative of one of our largest shareholders, Elliott Management. Since 2016, five new independent directors have joined the Board, adding complementary and relevant skillsets, leadership and diversity, and the Board continues to be led by an independent chair.

While eBay’s Board and leadership team are confident that the above actions will help us achieve our previously-stated priorities for 2020 and position eBay for sustainable, profitable long-term growth, we remain open to all value-enhancing opportunities.

What do you think? Should eBay sell the classifieds group and aggressively refocus on the core marketplace?

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