Starboard Renews Push on EBay's Classified Unit
February 04 2020 - 09:40AM
Dow Jones News
By Micah Maidenberg
Hedge fund Starboard Value LP reiterated its call for eBay Inc.
to shed its classified-advertising business, a move it claims will
help the company improve its main online marketplace.
About a year ago, Starboard and Elliott Management Corp.
publicly called on the company to rid itself of the classified unit
along with ticket-seller StubHub. EBay in November agreed to sell
the latter business for $4.05 billion to a Swiss company.
In a letter to eBay Chairman Thomas Tierney and interim Chief
Executive Scott Schenkel that Starboard released Tuesday, the
investor criticized what it said was eBay's resistance to selling
the classified business. Starboard said in many markets, eBay's
main marketplace and the classified unit compete for the same
customers and product listings.
"If the businesses were separate, both would be better equipped
to attempt to acquire customers and grow without this
complication," Starboard said in the letter.
Starboard currently owns about 1% of eBay's stock. It first took
the stake in 2018.
EBay didn't immediately respond to a request for comment.
Shares of eBay rose about 4% in premarket trading.
The company's classified group includes a range of platforms for
such advertising in markets around the world, including Gumtree,
which targets the U.K., Australia and other countries, and
Vivanuncios in Mexico.
The classified business generated $1.06 billion in
marketing-related revenue last year, roughly 10% of the San Jose,
Calif.-based company's total.
Starboard said in the letter it is "open-minded" about how eBay
could shed the unit, adding that the business could be sold.
The investor called for eBay to conduct a more intensive review
of costs related to its main marketplace and drive stronger revenue
in part through advertising initiatives.
"We also believe eBay should return to its roots in targeting
its historical core buyer universe of 'self-expressionists and
treasure hunters,' who are seeking unique, hard-to-find, or
value-oriented items, " Starboard said in its letter.
In September, eBay's former CEO Devin Wenig stepped down, saying
he wasn't on the same page as the company's board. Mr. Schenkel,
the company's finance chief, was appointed interim CEO.
The company had agreed to add three new directors to the group
as part of a deal with Starboard and Elliott. Last March, Elliott
partner Jesse Cohn, who focuses on U.S. equity activism for the
investor, and Marvell Technology's Matt Murphy joined the
board.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
February 04, 2020 09:25 ET (14:25 GMT)
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