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Carl Icahn: Time to break up eBay

FORTUNE — Carl Icahn has his sights set on a Silicon Valley giant, and it isn’t Apple (AAPL).

eBay Inc. (EBAY) this afternoon announced that Icahn has nominated two of his employees to its board of directors, and submitted a non-binding proposal to spin PayPal out into a separate business.

Icahn earlier this month acquired a 0.82% stake in eBay, as part of what appears to be his heightened interest in the tech sector (Apple, Dell, etc.). eBay suggested that it has previously considered, and rejected, a PayPal spinout. It also expressed support for its current directors. The company is expected to further address the matter during its previously-scheduled Q4 earnings call today at 5pm ET.

Below is eBay’s statement regarding Icahn’s proposal:

eBay Inc. announced today that it has received a notice from Carl Icahn indicating that he has nominated two of his employees to its Board of Directors and submitted a non-binding proposal for a spinoff of its PayPal business into a separate company. The notice stated that companies controlled by Mr. Icahn had, earlier this month, acquired shares and derivative securities that give him an economic interest of approximately 0.82% in the company.

eBay welcomes the opportunity to listen to the perspective of all of its shareholders, including Mr. Icahn. His Board nominations will be passed on to the Board’s Corporate Governance and Nominating Committee, which will consider them in the ordinary course of business. We would note that eBay has a world-class board of directors with directors who have significant experience in technology and financial services.

Regarding Mr. Icahn’s separation proposal, eBay’s Board of Directors routinely assesses the company’s strategic direction and has explored in depth a spinoff or separation of PayPal. eBay’s Board of Directors has concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value. As part of eBay Inc., PayPal is able to leverage the company’s technology capabilities, commerce platforms and relationships with retailers, brands and large merchants worldwide. Payment is part of commerce, and as part of eBay, PayPal drives commerce innovation in payments at global scale, creating value for consumers, merchants and shareholders.

eBay shares are up more than 7% in aftermarket trading. With 0.82% of eBay’s outstanding stock, Icahn would be the company’s 25th largest outside shareholder.

Update: eBay reported fourth quarter earnings for 2013, with company revenues up 13% for the period to $4.5 billion. Of the company’s three business divisions – Marketplaces, Enterprises and Payments – the Payments division, or PayPal, remains the fastest-growing, with revenues climbing 19% to $1.8 billion. (Indeed, CEO John Donahoe has repeatedly said in the past he expects PayPal to surpass Marketplaces, or auction site, within the next three to five years.)

During the earnings call this afternoon, Donahoe spent a significant chunk of time addressing Icahn’s non-binding proposal to spin off PayPal. “You won’t be surprised that this is not a new idea,” Donahoe said. He continued to explain why keeping eBay and PayPal together remains the best strategy. As examples, he pointed out that eBay is directly contributing to PayPal’s rapid user growth at no cost – one-third of PayPal’s 5.2 million new active accounts for the fourth quarter — thanks to increasing integration of PayPal in eBay’s web and mobile services. And roughly 50% of eBay’s profits are being utilized to help fund PayPal’s rapid, continued expansion. Donahoe explained the board remains unified behind keeping the company intact until “these synergies run their course.”

Additional reporting by JP Mangalindan