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eBay boss tells workers to ignore 'noisy' Icahn's PayPal sale campaign

Investor chips in with comedy barb at Carl's spinoff efforts

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eBay chief John Donahoe has warned employees to ignore Carl Icahn's "noise" about the board and the proposed spin-off of PayPal.

Icahn has been engaged in a fierce campaign to convince the online bazaar to spin off the payments firm and has levelled allegations that the board isn't fit to make the decision, claiming conflicts of interest in the directors.

The activist investor has kept up a constant string of open letters to try to agitate the company, in which he holds a stake of just over two per cent, to accept his proposal and two of his nominees to the board.

Donahoe warned employees in a video yesterday not to be distracted by Icahn's campaign, Reuters reported.

"The noise is going to get louder over the next four to six to eight weeks," he said. "Don't pay attention to the noise. Stay focused, and don't be distracted.

"The thing to keep in mind is that we have more insight around our own company than anyone on the outside can. It's easy to say when you're sitting on the outside, 'Oh, simplistically separate, and we'll do some short-term financial manoeuvring to drive the share price up'."

Donahoe's video message follows yet another open letter from Icahn on Wednesday reiterating his claims against the board. The stockholder has alleged that the sale of eBay-owned Skype to the fund of board member Marc Andreessen was suspect, particularly in light of the $4bn markup the fund sold it on to Microsoft for a year or so later. Icahn claims that eBay isn't telling the full story about the sale and has called for shareholder access to the documents detailing the deal.

"I believe that the Skype affair, only some of the sordid details of which we recently exposed, represents a complete and utter breakdown in the system of checks and balances," he wrote.

"I believe strongly that stockholders should vote for our nominees because eBay cries out, like no other company I have ever seen before in my many years on Wall Street, for owner representatives on the board who will act as watchdogs.

"I believe that if nothing untoward went on with the sale of Skype, and if CEO John Donahoe, director Marc Andreessen and chairman and founder Pierre Omidyar truly believe, as they have proclaimed (though not, I believe significantly, under oath), that my claims are “false and misleading,” then the board should have absolutely no reason not to respond to the books and records demand we have submitted… Thus far, the company has offered to show us only certain limited amounts of material responding to our inquiries – and has insisted that all documents produced must be subject to confidentiality restrictions."

Donahoe has insisted that top shareholders at eBay back the company's intention to hang onto PayPal – and he got some proof of that with an open letter from one per cent stakeholder Smead Capital, also on Wednesday.

Smead lambasted Icahn for talking about a period at eBay when he wasn't even a shareholder (having only recently bought his share) and said stockholders were "thrilled" when Donahoe cleared a $1.9bn profit on Skype.

"While we agree that spinning out PayPal would give the company a short-term boost in stock price, we believe it will get in the way of all the money that John Donahoe and his team can make us over the next ten to twenty years," chief exec William Smead wrote.

"All your activism could get in the way of what we believe will be a multi-decade ten-fold increase in our original investment in eBay. After all, since John Donahoe took over as CEO at eBay on March 31st, 2008, the stock has outperformed both the S&P 500 and the stock of Icahn Enterprises." ®

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