As it tries to streamline, eBay Inc (NASDAQ:EBAY) is now a prime takeover target, Leslie Picker told Trish Regan, Alex Barinka and Paul Sweeney on Bloomberg’s Street Smart.
Recently, it was reported that eBay Inc (NASDAQ:EBAY) would be cutting its workforce after the planned spin-off of its electronic payments unit PayPal, Inc. next year.
“Blinking red lights. Takeover target. Takeover target,” Picker said. “Their spinning off PayPal. Now eBay is slimming down, trying to cut costs.”
She said that companies usually cut costs with employees and noted that a 10% cut in eBay employees is a “big chunk”.
She said that other companies will now look at eBay Inc (NASDAQ:EBAY) more closely as a takeover target. She said at a later part of the discussion that industry observers should keep an eye on the company as a takeover is likely to happen or at least be discussed with other firms.
Nonetheless, she noted that eBay Inc (NASDAQ:EBAY) will become a much slower growing business once it spins off PayPal, Inc. into a separate business. PayPal made up a substantial part of the company’s growth as well as the money it made every year.
This is partly why Carl Icahn, the notorious activist investor and largest institutional investor with a stake in eBay, was very adamant in campaigning that PayPal should be spun off by its parent company to unlock more shareholder value.
Apart from Icahn’s Icahn Capital Lp, William B. Gray’s Orbis Investment Management is a massive eBay Inc (NASDAQ:EBAY) shareholder. The firm reported about 16.49 million shares in the internet commerce company by the end of the third quarter. This is a very considerable increase of about 243% in the holding of the institutional investor in eBay compared to its position in the previous quarter.