EBay (NASDAQ:EBAY) announced it would cut 2,400 employees, 7 percent of its workforce, as it enters into a standstill agreement with activist investor Carl Icahn. The company is preparing to split its marketplace and payment businesses.
Once split, the company also announced that it will explore selling off its enterprise unit or an IPO, reported Bloomberg. In preparation, the company will add three new board members, including a representative for Icahn.
The board announced on Sept. 30 a plan to separate the company into two businesses and that eBay will focus less on delivery in favor of click-and-collect opportunities. EBay's PayPal will become one entity, making it easier for the platform to compete against other online payment providers and give the marketplace better traction to focus on competition.
EBay is expecting first quarter revenue will be $4.35 billion to $4.45 billion, falling short of analysts' projections of $4.71 billion. In the latest holiday quarter, sales were up 9 percent to $4.92 billion, the slowest holiday gain since 2010.
Restructuring costs are estimated to be between $210 million and $240 million in the first quarter, reported Reuters. For the entire year, costs will reach between $350 million and $400 million.
The standstill with Icahn includes the separated PayPal having a staggered board, at least a 20 percent shareholding trigger before any poison pill activities and only allowing special meetings to be called by holders of 20 percent of the stock.
"We believe that if an offer is made for a company it should be the decision of the shareholders—not the board—to decide whether that offer is worth accepting," Icahn said in a statement. "Following the spinoff, eBay and PayPal will both be well-positioned to take advantage of multiple opportunities."
Joining the board are Frank Yeary, Perry Traquina and Jonathan Christodoro. The agreement with Icahn allows him to determine which board Christodoro will serve on at the time of separation.
"I'm thrilled to join the board of such an innovative company as it embarks on a path to capitalize on eBay and PayPal's respective growth prospects," said Traquina. "The separation is an excellent opportunity to create sustainable and lasting value—providing shareholders more targeted investment opportunities while preserving the benefits of the current relationships."
-See this EBay press release
-See this Bloomberg article
-See this Reuters article
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