Billionaire activist investor Carl Icahn said EBay Inc. should pursue an outright sale of its PayPal unit while progressing on a plan to separate the payments business from its online marketplace.
Icahn, whose investment fund Icahn Associates Corp. owns 2.5 percent of EBay’s (EBAY) shares, described PayPal as a “jewel” -- a dominant player with online merchants facing heightening competition from new rivals such as Apple Inc.’s (AAPL) Apple Pay.
“That can’t last forever. Now somebody would love to buy them, I would believe, and this is what they should be exploring,” Icahn said yesterday in a Bloomberg Television interview with Stephanie Ruhle after speaking at the Robin Hood Investors Conference in New York. “They waited too long to do this spinoff -- great thing to do -- and they should keep moving on that, but they should also explore a sale.”
Icahn, 78, who became an activist investor after
gaining fame as a corporate raider in the 1980s, has recently taken large stakes and antagonized management at technology-focused companies including Apple, Netflix Inc., Dell Inc. and Nuance Communications Inc., agitating for shareholder-friendly changes.
Separately, Icahn also said yesterday Warren Buffett is sometimes “way too easy” on companies in which his Berkshire Hathaway Inc. invests.
“Warren Buffett should do more” about corporate governance, Icahn said in the interview when asked about Buffett’s reputation as the Oracle of Omaha. “He’s a smart guy and he’s done well for shareholders. And there are things I disagree with him on.”
Different Styles
Icahn and Buffett have broached their divergent philosophies before. In May, Buffett and longtime business partner Charles Munger questioned whether activist investing improves targeted companies.Icahn said then that he understood and somewhat agreed with the criticism that some activists were only interested in a short-term pop in shares -- and distanced himself from that motivation.
Buffett has also said that his style differs from Icahn’s in that Icahn goes in to companies where there’s a problem, and Buffett doesn’t.
EBay announced Sept. 30 it would spin off PayPal, reversing its position from earlier this year when the company fought Icahn’s demands to pursue such a move.
Icahn, who told CNBC yesterday he had dinner with EBay’s chief executive officer two nights ago, said in the Bloomberg interview he’s convinced John Donahoe wants to “enhance value” at the company, and has also “made a lot of errors.”
Icahn routinely bypasses standard press releases by Tweeting his news and comments, and last year started a website called Shareholders’ Square Table to opine on corporate governance.
The New York-based investor is worth more than $22 billion, according to Bloomberg Billionaires, and primarily invests his own fortune, rather than relying on money from outsiders. That independence and the size of his war chest often increases Icahn’s influence on target companies, versus other activist funds who may face redemptions during prolonged campaigns.
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