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EBay May Sell or Spin Off StubHub Ticketing Unit at Urging of Activist Investors

Todd Spangler

Responding to pressure from activist investors, eBay announced that it has initiated a strategic review of its assets — which may include the sale or spinoff of its StubHub ticket-resale unit.

The ecommerce company also said it is evaluating options for the eBay Classifieds Group. EBay announced the review after activist hedge fund Elliott Management, which acquired more than 4% interest in eBay in January, urged the company to divest StubHub and the classifieds group, arguing in a letter to management that the assets were undervalued. Starboard Value, another activist investor group that holds a 1% stake in eBay, made a similar appeal.

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StubHub claims to be the world’s largest ticket marketplace with tickets available for over 10 million live sports, music and theatrer events in more than 40 countries. StubHub was acquired by eBay in 2007 for $310 million.

For the fourth quarter of 2018, StubHub had revenue of $314 million, up 2% year-over-year, on gross ticket sales of $1.41 billion (down 2%). EBay’s Classifieds platforms posted revenue of $263 million for the period, while its core Marketplace business generated $2.3 billion in revenue.

Also Friday, eBay named Jesse Cohn, Elliott Management’s head of U.S. equity activism, and Marvell Technology president and CEO Matt Murphy to its board. The company also announced that it plans to add a third new independent director later in the year.

Devin Wenig, president and CEO of eBay, said the company decided to move forward with the changes after meeting with shareholders over the last two months. “The bottom line is that we all share common ground: we see tremendous opportunity ahead and want to see eBay’s full potential realized over the long-term,” Wenig said in a statement. “The initiatives we are announcing today are the result of this constructive dialogue.”

In a Jan. 22 letter to eBay’s board, Elliott’s Cohn claimed that strategic changes by eBay could increase its value 75%-100% from its current stock price. “StubHub and eBay’s portfolio of Classifieds properties represent high-value, strategic assets that are worth meaningfully more than the value currently being ascribed to them as part of eBay,” the letter said in part. Cohn also recommended other changes, including “revitalizing” eBay’s Marketplace is after “prolonged, self-inflicted misexecution” and cutting costs to increase operational efficiency.

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