Topping eight-months highs on Friday, shares of online marketplace
company eBay (EBAY 37.45, +0.30, +0.81%) finally gave in to the
months-long battle between Elliott Management and Starboard Value, announcing
several new initiatives with the goal of positioning eBay for ongoing success
and value creation.
Today’s announcement comes a little more than one month after Elliott and Starboard both outlined value creation opportunities in letters to eBay management. Perhaps in an attempt to appease activist concerns, eBay management announced an amped up capital return program when it reported fourth quarter results on January 29.
Specifically, eBay announced the initiation of the first quarterly dividend paid in the company’s history. The dividend will be paid in the amount of $0.14 per share, with the first quarterly dividend to be paid on or about March 20, 2019 to shareholders of record as of the close of business on March 1, 2019. What’s more, management also announced an increase to the company’s share repurchase authorization by an additional $4.0 bln with no expiration, with an expected 2019 share repurchase of approximately $5.0 bln.
Then, in response to the company’s quarterly report Elliott stated on January 31, “It is clear eBay needs urgent change including a holistic operational review which will produce lasting efficiencies and improved execution. Without question, this focus must include a strategic review that evaluates a separation of Stubhub and Classifieds…”
The result of the activist pressure and mixed fourth quarter results culminated in today’s announcement that the company will undertake certain initiatives which include an operating review and the commencement of a strategic review of the company's portfolio of assets, including StubHub and eBay Classifieds Group.
In a process initiated by eBay's Board of Directors and management late in 2018, these initiatives build on the capital allocation measures announced by eBay in January, including the introduction of a quarterly dividend and the return of $7 bln of capital to shareholders over the next two years. Additionally, eBay is highly focused on driving meaningful operational improvement. This is demonstrated by recently announced significant restructuring measures, including streamlining operations by consolidating the Company's Marketplaces regions under a single global leadership team while also funding significant incremental investments in payments and advertising initiatives.
eBay announced the initiation of an operating review, which will be led by the eBay management team and overseen by the Board of Directors. eBay intends to announce the findings and targets from this review at an event in the Fall.
The crux of today’s news is that eBay, with the assistance of external financial advisers, has initiated a strategic review of its asset portfolio, including but not limited to StubHub and eBay Classifieds Group.
In support of these strategic initiatives and consistent with its commitment to board refreshment, eBay will immediately add Jesse Cohn of Elliott and Matt Murphy of Marvell Technology to the Board of Directors. Further, eBay will add a third new independent director later in the year and continue to examine how the Board can maintain the appropriate mix of skills, qualifications and diversity of backgrounds to best represent the company's stockholders.
eBay has entered into a cooperation agreement with affiliates of Elliott, who hold more than a 4% economic interest in eBay. eBay has also entered into a cooperation agreement with affiliates of Starboard Value, who hold an economic interest of approximately 1% in eBay. Under the terms of their respective agreements, each of Elliott and Starboard have agreed to certain standstill, voting, and other provisions with eBay.
After initially trading 5.36% higher this morning on the news, shares have pared their gains now up "just" 2.10% after some investors perhaps employed a bit of profit taking following the multi-month highs.
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