EBay is close to striking a settlement with shareholders Elliott Management and Starboard Value that would give those investors one board seat each and potentially input on another seat in the future, sources familiar with the matter told The Wall Street Journal. EBay did not immediately respond to Retail Dive's request for comment.
Jesse Cohn, an Elliott partner heading up the U.S. equity activism practice, is expected to join the board through the deal, sources told the Journal. The other appointment will come from Starboard but will not be an employee of the hedge fund, the sources also said.
The anticipated settlement is likely to call for an operational review to increase the online marketplace's profitability and portfolio review, which could result in splitting up or selling the business units. A deal is not guaranteed and if nothing goes through, the activists have until Friday to seek board seats through a proxy fight, the Journal reports.
Shareholders are growing impatient with eBay's sluggish sales and are looking for ways to extract what value remains. In a letter sent to the online marketplace's board of directors last month, the Journal reported that Elliott disclosed its more than 4% stake in the company and urged it to spin off Stubhub and its classified-ads unit. Investors like Starboard have also previously encouraged similar moves, eyeing the billions it has said could be gained from a sale.
EBay is under pressure to give its shareholders more of something, although that could first come in the form of greater dividends. Last month, in documents regarding its full year and fourth quarter results, eBay said it returned $4.5 billion of capital to shareholders through repurchases of its stock. Over the next two years, the company says it will return about $7 billion to shareholders through buybacks and dividends, including $5.5 billion this year. As the company's first-ever dividend and increase of its share repurchase program (as noted by CEO Devin Wenig in a press release) the move was meant as a significant gesture to shareholders.
In the last quarter of the year, eBay reported that revenue rose 6% to $2.9 billion. It also spurred active buyers up 4% across platforms, totaling 179 million global active buyers. The company's marketplaces raked in $2.3 billion in revenue, growing 7%, while Stubhub revenue rose 2% up to $314 million. Its classified platforms were up 8%, reaching $263 million.
Looking ahead at the year, Wenig said the focus is on improving the user experience while staking out long-term "growth opportunities" in advertising and payments.