Carl Icahn truly deserves his title as the greatest activist investor on Wall Street and the latest eBay Inc (NASDAQ:EBAY)‘s decision to spin-off PayPal confirms it once again. In a statement on his website, Shareholders’ Square Table, Mr. Icahn said that eBay’s board finally did what they should have done some time ago and overall he is happy with the decision.
“As I have said in the past and have continued to maintain, it is almost a “no brainer” that these companies should be separated to increase the value of these great assets and thus to meaningfully enhance value for all shareholders,” Mr. Icahn said.
In addition, the investor believes that PayPal has to strengthen its payment business through an acquisition or a merger with another leading company in the segment. And in fact, there are plenty of great choices with whom PayPal could join forces to get an edge in front of its competitors, such as Apple Pay. One of the examples that come to mind is WePay, which have the advantage of integrating the payment system into the website, without redirecting the customers to a virtual terminal. Also, there is Skrill (formerly known as Moneybookers), which has a vast customer base with over 36 million accounts and allows an almost-immediate transfer of money from the online account to a prepaid debit card.
All in all, eBay Inc (NASDAQ:EBAY)’s decision to spin-off PayPal is a smart one, especially taking into account that PayPal has a very high rate of growth and its revenue is almost as high as eBay’s revenue from its core business. The investors already appreciated the decision of the e-commerce company with eBay’s stock spiking on Tuesday after the announcement.
However, let’s take a look at Mr. Icahn’s role in eBay Inc (NASDAQ:EBAY)’s decision to spin-off PayPal in more detail. Mr. Icahn initiated a stake in the eBay during the first quarter of 2014, and almost immediately went activist urging the board for a spin-off. In a letter from March 26, Mr. Icahn said about PayPal: “This potential financial juggernaut lies buried inside eBay. […] I believe that PayPal presents a massive opportunity.” And while the decision regarding a spin-off has been supported by many shareholders of the company there have been discussions around whether eBay Inc (NASDAQ:EBAY) should separate PayPal as a publicly-traded company or sell it to another tech giant.
Mr. Icahn supported the idea that PayPal should conduct its own IPO and become a publicly-traded company, which was the decision that was finally approved by eBay Inc (NASDAQ:EBAY)’s board. As an argument to why PayPal should become a publicly-traded company rather than acquired by someone else, Mr. Icahn mentioned, among other things, that eBay’s sale of Skype to Microsoft costed shareholders around $4 billion.
Well, with the latest development, Mr. Icahn can add another win to his record. With his previous successes with Apple Inc. (NASDAQ:AAPL), Family Dollar Stores, Inc. (NYSE:FDO) and many others, Mr. Icahn remains to be one of the most successful investors who will always be on the radars.