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Icahn calls on eBay to sell 20 percent of PayPal in an IPO

March 19 (Reuters) - Activist investor Carl Icahn on Wednesday called on eBay Inc to sell 20 percent of its PayPal payments unit in an initial public offering.

Selling the stake would allow for the benefits of a stand-alone PayPal and maintain the synergies between eBay and PayPal, Icahn wrote in an open letter to fellow eBay shareholders.

Icahn in January called for eBay to hive off its fast growing PayPal business. EBay has repeatedly said both businesses are better off together.

"We believe conducting a 20% IPO of PayPal - and creating two dedicated and highly-focused independent businesses - will provide the best opportunity for these businesses to remain competitive over the long-term," Icahn wrote in the letter.

Icahn owns more than 2 percent of eBay shares.

(Reporting by Phil Wahba in New York; editing by Andrew Hay)