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>> Shares of eBay jumped Tuesday after two hedge funds known for their shareholder activism announced stakes in the company and called for major changes. One is billionaire Paul Singer's Elliott Management, which in a letter, announced its $1.4 billion stake in eBay, the other, Starboard Value. A source told Reuters that's also taken a big stake.
Reuters' Liana Baker.>> According to the sources I spoke to, both Elliott and Starboard wanna see eBay sell off two businesses. One being the StubHub ticketing business, and the second one being the classifieds, which are highly profitable businesses. So, these activist investors want eBay to focus on its core business, which is the marketplace where people buy and sell goods.
And shareholders could reap a lot of value, billions of dollars, from the sales StubHub and the classifieds business. And maybe at some point, when eBay is a leaner company without these extra units, then it could explore a sale of its core marketplace. So I would say the activists just want to see eBay generate a lot more money and value for shareholders.
>> Elliot also thinks eBay could clean up its operations, which it said would require a roughly $250 million increase in operating expenses from 2018 to 2021. If it follows these recommendations, Elliot sees eBay shares potentially doubling their value. Both letters are the latest sign of pressure on eBay to get its act together.
>> Elliot Management has sort of informally threatened the board in the letter today. So, if the company doesn't sort of heed the demands of these activists, these hedge funds could push for board seats. They could continue to make noise, and kind of stir up the dissent among shareholders.
>> Shares of eBay lost a quarter of their value last year, as the company lost market share to online competitors like Amazon. But Tuesday it rose as much as 12% on the news.