eBay-PayPal split could see sale or public offering of enterprise unit

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The eBay-PayPal split could see either company snapped up by another organisation after important groundwork was laid on Wednesday to facilitate a future acquisition.

Ebay Inc announced on Wednesday that the company had made an agreement with activist  investor Carl Icahn that will give investors a greater say in its PayPal unit after the split, Reuters reported, adding that it was also exploring a sale or public offering of its enterprise unit.

A future acquisition of eBay or its payments arm could be on the cards once PayPal has been spun off.  Wall Street analysts have identified Alibaba, Google and Amazon as potential acquirers.

The agreement with eBay’s largest shareholder Icahn is intended to give shareholders a larger voice in important decisions, particularly an acquisition bid.

It saw Icahn Capital executive Jonathan Christodoro  named to eBay’s board, with the ability to transition to PayPal’s board once the spin-off occurs. The company is also adding two Wall Street bankers to its board, which will now number 15.

Icahn also proposed a number of measures to enhance corporate governance at PayPal. They include a provision that any “poison pill” designed to ward off acquisition attempts be ratified by stockholders or expire after 135 days, and that holders of 20 per cent of its shares be allowed to call a special meeting of stakeholders.

EBay also plans to cut its workforce by 2,400 in the current quarter across its marketplace, payments and enterprise divisions. The restructuring and separation of the two companies is expected to costs between $210 million and $240 million in the first quarter and $350 million to $400 million for the entire year.

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