The end of eBay as we know it? Job cuts and enterprise spin-off planned as Carl iCahn gets his way
A shake-up at eBay will see the e-commerce giant slash 2,400 jobs and spin off its enterprise division as it bowed to pressure from activist investor Carl Icahn.
The job cuts will be made across its global enterprise, marketplace and PayPal business – a loss of around seven per cent of staff – and is expected to save $300m (£198m) a year.
Ebay will also spin off its enterprise arm which works with other companies to get them selling on the site, either taking it public as a separate company or selling it off.
Activist shareholder Carl Icahn, eBay’s largest shareholder who has pushed for the company to split, has succeeded in getting the firm to adopt a number of corporate governance changes including the addition of business partner Jonathan Christodoro to the board.
Christodoro will move to the board of PayPal after it becomes a separate company. Ebay revealed plans to spin-off the payments business last year.
“We believe the actions of eBay’s board and management in crafting this agreement with us have marked a large step forward for corporate governance,” Icahn said in a statement. “The company reached out to us recently to discuss value enhancement generally, and our constructive conversations led to the mutual development of a governance structure going forward that we believe will better align the interests of shareholders, directors, management and other stakeholders.”
Under the new agreement, PayPal will have limited ability to prevent a takeover after its split, making the company an attractive proposition for bidders.
Of the three – PayPal, enterprise and marketplace – PayPal and enterprise are the better performing. Analysts believe the three will be worth more as separate businesses than combined.