eBay has rejected a call from activist investor Carl Icahn to spin off its PayPal division into a separate company.
John Donahoe, chief exec of the online marketplace, said that he had spoken with Icahn but the board and management believed that eBay and PayPal would do better if they stayed together.
"The synergies are clear," he said in a letter to employees. "PayPal has succeeded because it is a part of eBay, not in spite of it. eBay accelerates PayPal’s success, providing tens of millions of customers who then help PayPal grow off-eBay.
Donahue pointed out that it's not the first time the idea of spinning off the online payments firm had come up, and said the board does keep an eye on that option. But he told employees not to let Icahn's proposals "become a distraction".
"The best way we can create value is by executing our plans, delivering growth and serving our customers," he said.
"The closed loop global transaction data provided by eBay makes PayPal smarter,” he added, “enhancing its world-class risk capabilities. And eBay funds PayPal’s growth. This enables PayPal to invest aggressively in mobile, credit and acquisitions such as Braintree."
Analysts have suggested before that building a wall between eBay and PayPal would help other etailers to see the payments service as an option for their own shops. But eBay is likely to be reluctant to let the once-independent firm go, given that it contributes around 40 per cent of the company's overall revenue.
Icahn's proposal comes along with two nominations to eBay's board, who haven't been named yet. The company said that then nominees would be passed on to the relevant committee for consideration, but also hinted that it was quite happy with the current board. Icahn currently holds a 0.82 per cent stake in eBay.
"We would note that eBay has a world-class board of directors with directors who have significant experience in technology and financial services," the board said in a statement.
Despite Icahn's agitation, the company's full year results, released yesterday, show that both payments and marketplaces are going well for eBay. The online bazaar saw net revenue grow across its business by 14 per cent to $16bn in 2013 compared to the year before, with Payments rising 19 per cent and Marketplaces gaining 12 per cent.
Net income for the year was $2.8bn, a lift of nine per cent from 2012. ®