EBAY eBay Inc

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 sharpen its focus on 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. Last March, eBay said it would conduct a strategic review and add three new directors to its board. EBay in November agreed to sell its StubHub 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 more than 1% of eBay's stock. It first took the stake in 2018.

EBay said it has taken significant measures to boost shareholder value and strengthen its business, but will review the letter from the activist investor.

"The board and eBay's management team are aligned in their commitment to taking all appropriate steps to drive the value of the company," eBay said in a statement.

The online marketplace also said it plans to provide an update about the classified business by the middle of the year.

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.

A representative from Elliott declined to comment.

Starboard 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.

EBay said in its statement that five new independent directors have joined the board since 2016.

Colin Kellaher contributed to this article.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

February 04, 2020 14:41 ET (19:41 GMT)

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