Elliott thinks Walmart, Google and private equity could be interested in buying eBay's core marketplace business for about $15 billion, source says
- Hedge fund Elliott Management believes Walmart, Google or private equity would all make sense as potential buyers for eBay's marketplace business, according to a person familiar with the matter.
- Elliott disclosed a more than 4% stake in eBay today.
- Elliott is calling for eBay to spin or sell StubHub and its classifieds business.
Activist hedge fund Elliott Management thinks Walmart, Google or several private equity firms would be interested in acquiring eBay's marketplace business if it sheds StubHub and eBay Classifieds Group, according to a person familiar with the matter.
Elliott disclosed it owns more than 4 percent of eBay in a letter Tuesday, which also outlined recommendations for the company, including spinning off StubHub and eBay's portfolio of classified advertising properties. Activist hedge fund Starboard Value LP also has taken a position in eBay and plans to speak to the company about similar changes, said another person familiar with the matter.
EBay has a market valuation of more than $31 billion. If eBay is able to separate StubHub and the classifieds business, the remaining marketplace business could be a more realistic size for a private equity transaction. EBay's marketplace business generated $2.1 billion of revenue in the third quarter. StubHub took in $291 million in sales and the classifieds unit booked $254 million.
Elliott projects the Classifieds Group could sell for between $8 billion and $12 billion and estimates StubHub could fetch between $3.5 billion and $4.5 billion. If EBay sells the marketplace business without operational improvements, Elliott projects it could fetch about $15 billion, one of the people said.
Founded in 1995 before the first dot-com boom, eBay was once the mecca of online e-commerce but has long since handed that mantle over to Amazon. Elliott said the company's share price could reach more than $63 a share by 2020 if it follows its plan to focus on the "deeply undervalued" marketplace business.
Spokespeople for Google and Walmart didn't immediately respond to requests for comment. eBay responded to the Elliott letter in a statement, saying the company appreciates "Elliott's recognition of the strength and power of eBay's business and will carefully review and evaluate Elliott's proposals."
EBay has steadily grown revenue since splitting off PayPal in 2015. Still, shares are about flat compared to where they were two years ago. The S&P 500 is up about 15 percent over the same time period.
This isn't the first time eBay has dealt with activists. EBay settled a proxy fight with activist investor Carl Icahn in 2014 after he called for the company to spin off PayPal. The company ended up taking Icahn's advice about a year later.
Ebay shares were up more than 6 percent on the news of the Elliott stake in late Tuesday trading, a down day for most of the rest of the tech market.
Thomas Franck contributed to this report.
With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, and CNBC World, CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information 410 million homes worldwide, including more than 90 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 15 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 7:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.
CNBC Digital delivers more than 52 million multi-platform unique visitors each month. CNBC.com provides real-time financial market news and information to CNBC's investor audience. CNBC Make It is a digital destination focused on making you smarter about how you earn, save and spend your money by zeroing in on careers, leadership, entrepreneurship and personal finance.
CNBC has a vast portfolio of digital products, offering CNBC content to a variety of platforms such as: CNBC.com; CNBC PRO, a premium service that provides in-depth access to Wall Street; a suite of CNBC mobile apps for iOS and Android devices; Amazon Alexa, Google Assistant and Apple Siri voice interfaces; and streaming services including Apple TV, Roku, Amazon Fire TV, Android TV and Samsung Smart TVs. To learn more, visit https://www.cnbc.com/digital-products/.
Members of the media can receive more information about CNBC and its programming on the NBCUniversal Media Village Web site at http://www.nbcumv.com/programming/cnbc. For more information about NBCUniversal, please visit http://www.NBCUniversal.com.