The grudge match between vulture capitalist Carl Icahn and eBay’s board of directors has finally come to an end. The company today announced that it will elect former AT&T CEO David Dorman to its board of directors. In exchange, Icahn will no longer accuse existing board members of wrongdoing and stop demanding that PayPal be made its own company.
The conflict was often characterized as an example of what happens when Silicon Valley and Wall Street disagree. Icahn wanted to make money by convincing eBay that PayPal should be a separate business – eBay wanted to continue developing its oft-challenged payment platform. The disagreement led to a seemingly never-ending series of open letters, the creation of a dedicated site, and a lengthy trip around the media circuit for eBay CEO John Donahoe.
The conclusion to this battle may not have been terribly exciting, but at least we can stop writing about it now.
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The New York Times reports on how buddy-buddy Icahn and eBay have become:
Under the terms of their deal, Mr. Icahn will withdraw his bid for two seats on the e-commerce giant’s board and end his demand that the company sell a minority stake in its PayPal unit to shareholders. In return, eBay will add as a new director — David W. Dorman, the former chief executive ofAT&T and a candidate both sides have agreed upon.
‘As a result of our conversations, it became clear that Carl and I strongly agree on the potential of PayPal and our company,’ John J. Donahoe, eBay’s chief executive, said in a statement. ‘I respect Carl’s willingness to work together to drive sustainable shareholder value today and into the future. His record shows that he has done this with many other companies in the past.’
Reuters reports that Icahn hasn’t given up on his efforts to spin-off PayPal:
In mid-March, Icahn appeared to backtrack, calling on eBay to sell 20 percent of PayPal in an initial public offering, rather than do a full spinoff.
Icahn in a statement on Thursday said he was happy to have reached a point of detente with eBay, although he still believed the company should sell off PayPal. He also said Donahoe had agreed to meet regularly to discuss strategic alternatives for PayPal.
Forbes notes that Icahn previously lost — or at least didn’t entirely win — a similarly-controversial battle with Apple:
Backing off at Ebay marks the second time in the last year that Icahn’s effort to force a big tech company into change has been deflected. Last year, Icahn used a barrage of social and traditional media to urge AppleAAPL +1.31% and CEO Tim Cook to return more of the iPhone-maker’s cash hoard to shareholders. While Apple stopped well short of the $150 billion buyback Icahn initially demanded, the billionaire declared a form of victory when Cook acknowledged the company had accelerated its share repurchases in February.
Pando weighs in
I wrote about how hypocritical Icahn’s complaints about eBay’s board of directors were:
In other words, Icahn, a vulture capitalist-slash-activist investor who purchases large portions of companies before bullying them into “unlocking shareholder value” at the company’s expense, is condemning members of eBay’s board for allegedly using their position to make money at the detriment of the company. That’s irony that could be cut with a dull knife someone stole from their great-grandmother and then turned around and sold on eBay.
I then wrote about how boring the conflict had become after the two sides posted open letter after open letter:
The conflict has actually become quite formulaic. First Icahn publishes an invective open letter repeating claims he’s already made; then eBay responds with a measured response to those claims; and then the entire process repeats itself, until Icahn gets his way or gives up. The only variations involve the number of underlined words Icahn includes in his letter and the person responding on eBay’s behalf.
[image via wikimedia]