eBay gets ‘even’ with Carl Icahn

Apr 10, 2014

FORTUNE -- Carl Icahn today ended his three-month old feud with eBay Inc. (ebay), agreeing to withdraw his nominations for two board seats and his insistence that the company sell a minority stake in its PayPal unit back to shareholders (as you may recall, he originally wanted PayPal to be spun out into a separate company).

In exchange, Icahn and eBay have jointly agreed to add former AT&T CEO David Dorman to the eBay board of directors. Icahn also effectively becomes an insider, agreeing to sign a non-disclosure agreement covering any non-public information that the company and/or its board may share with him.

The meeting of the minds apparently was prompted by J.P. Morgan vice chairman Jimmy Lee, and followed a series of weekend conversations between Icahn and eBay CEO John Donahoe.

“As a result of our conversations, it became clear that Carl and I strongly agree on the potential of PayPal and our company,” Donahoe said in a prepared statement. “I respect Carl’s willingness to work together to drive sustainable shareholder value today and into the future. His record shows that he has done this with many other companies in the past.

As for Icahn, he issued the following tweet (and will appear at 12:30pm on CNBC)

eBay shareholders, however, have not reacted quite so positively. Shares are down more than 2.7% in trading as of this writing, bringing the stock down to $54.36 per share. That's just a hair lower than the stock's $54.41 per share price on the day that Icahn originally disclosed his position. And 8.33% below where eBay shares traded on March 6, which was their 2014 high-water mark.

One thing Icahn likes to point out is how the companies he holds usually appreciate in value, whether or not his specific demands are met. In this case, however, it isn't happening. Maybe he shouldn't have clicked that "Buy it now" button...

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