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eBay founder lashes out at Carl Icahn

The war of words between eBay and Icahn escalates as founder Pierre Omidyar jumps into the fray.


Carl Icahn has officially been told off by eBay's founder, board chairman, and largest shareholder, namely Pierre Omidyar.

In a statement released Thursday, Omidyar accused Icahn of "making unsubstantiated claims" about eBay. He also defended the decision not to spin off the PayPal unit and stood behind the board members targeted in Icahn's attack.

The skirmish between eBay and the activist investor flared up last month after the company rebuffed Icahn's proposal that it jettison PayPal and nominate two of his employees to the board.

In response, Icahn sent an open letter to eBay investors on Monday charging two board members with "blatant" conflicts of interest. Specifically, Icahn said that Marc Andreessen and Scott Cook were putting their own financial interests ahead of those of eBay investors. Icahn also took aim at eBay CEO John Donahoe for not having the strength to rein in these rogue board members.

eBay quickly challenged those claims with its own statement that accused Icahn of resorting to "mudslinging attacks against two impeccably qualified directors." Icahn lobbied back on Wednesday with another open letter to shareholders standing behind his accusations. That prompted eBay to issue yet another statement telling Icahn to "stick to the facts."

Whew. And now Omidyar has joined in on the brawl, calling Icahn's attacks "false and misleading." That puts the ball back in Icahn's court.

All of the nasty back-and-forth bickering hasn't hurt the stock, though. In fact, eBay shares have risen over the past few days. Hmm, maybe there's a method to Icahn's madness.

Omidyar's full statement appears below:

I am eBay Inc.'s founder, board chairman and largest shareholder.

A new eBay shareholder, Carl Icahn, is making unsubstantiated claims about our company -- and deliberately impugning the integrity of our directors.

After acquiring a stake in our company, Mr. Icahn asked a good question: should PayPal continue to be part of eBay? This is not a new idea. It is a question our board has asked ourselves as we periodically evaluate strategic options for the company.

Our board is deeply committed to doing what's in the best interests of shareholders. After diligent consideration, we believe that PayPal and eBay are better together. In the future, if we determine that's no longer true, we will act accordingly and in the best interests of shareholders and the company.

Instead of having an honest discussion about a reasonable question, Mr. Icahn has chosen to attack the integrity of two highly respected and qualified board members, Scott Cook and Marc Andreessen. He also has attacked the integrity of our CEO John Donahoe.

Mr. Icahn's attacks are false and misleading.

I want to be clear about the facts:

We have a world-class board. Scott and Marc are world-class directors with impeccable credentials. They have my full support. Our company and our shareholders benefit greatly from having Scott's and Marc's insight, experience and leadership on our board.

John Donahoe has my full support, and the strong support of our board. Over the last six years, John has led our company through a significant turnaround - a job many people thought was impossible. In the process, he has driven PayPal's growth and brought a renewed focus on innovation across the company.

The company has fully addressed other false claims made by Mr. Icahn. The facts can be found here and here.

Let me underscore a few points:

Throughout the board's process of divesting Skype, Marc Andreessen recused himself from all deliberations on the transaction, including all discussions, negotiations, and decisions. eBay and its shareholders benefitted from the divestiture of Skype and its ultimate sale to Microsoft. The transactions were widely seen as a superb outcome for the company.

Subsequent to the Skype transaction, Marc was re-elected to our board in 2012 with virtually unanimous support (99.7% of votes) of our shareholders. Like all of our directors, Marc serves at the pleasure of our shareholders, and our shareholders have spoken.

Mr. Icahn also makes unfounded claims about Andreessen Horowitz and its investment in Fanatics, a business formerly owned by GSI Commerce, which was acquired by eBay. Mr. Icahn's claims are wrong. Andreessen Horowitz made its investment in Fanatics more than a year after eBay divested it. There was absolutely no connection between the two events.

Mr. Icahn's claims about Scott Cook also are unfounded. As founder of Intuit and chairman of the company's executive committee, Scott has an exceptional track record of creating value and driving innovation. He has been an enormous asset to eBay's board for many years. The overlap between Intuit and eBay is small for both companies. Regarding hiring, any restrictions ended years ago.

These are the facts. That's what shareholders deserve to know.

Pierre Omidyar
eBay Inc. Founder and Chairman of the Board