// Major activist hedge funds Elliott Management & Starboard buy multi-million stake in Ebay
// Both demanding major changes and could demand it offload its Gumtree & StubHub fascias
// Elliott argues that Ebay’s value has seen a “rapid deterioration”
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Ebay is being forced by activist shareholders to undergo major structural changes and sell off both Gumtree and StubHub.
Yesterday it was revealed that Elliott Management, the activist hedge fund worth £26 billion which bought Waterstones and Perfect Home last year, acquired a four per cent stake in Ebay for $1.4 billion (£1 billion).
Starboard, a separate hedge fund, is also understood to have purchased a stake of less than four per cent in the online marketplace.
Both funds have called for Ebay to offload its ticket selling platform StubHub, which it purchased for $310 million (£238 million) in 2007, and the UK classified advert platform Gumtree which it acquired in 2005, to focus on its core marketplace business.
Elliott said that Ebay has “underperformed its peers and the market for a prolonged period of time” adding that the “rapid deterioration” of its valuation, having seen its share price drop 35 per cent since early 2018, had led to a loss of confidence from its shareholders.
“As the broader internet universe has flourished, especially ecommerce peers, Ebay’s stock has floundered,” Elliott partner Jesse Cohn wrote in a letter to Ebay’s board.
“Today Ebay suffers from an inefficient organisational structure, wasteful spend and a misallocation of resources. By increasing operational efficiency, Ebay can free up capital to invest in capability- and revenue-enhancing activities.”
In response to the demands, Ebay said: “We are focused on delivering value for our shareholders, customers and employees by driving the best choice, the most relevance and the most powerful selling platform to deliver growth.
“Accordingly, we appreciate Elliott’s recognition of the strength and power of Ebay’s business and will carefully review and evaluate Elliott’s proposals.”