The very long and public battle between eBay and activist investor Carl Icahn over the future of PayPal has ended with both sides making concessions, but in the end the online payment system will remain part of eBay.
The deal that brought this ugly disagreement to a close will have PayPal remaining an integral part of eBay and Icahn will withdraw his two nominees from being considered for the company's board. In return, both sides agreed to expand the board by one seat and add David Dorman, CEO of CVS Caremark, who Icahn supported for the position.
"We are very pleased to have reached this agreement with Carl, settling proxy issues and enabling our board and management team to focus our full attention on a goal every shareholder agrees on -- growing PayPal and eBay, and delivering sustainable shareholder value," said eBay president and CEO John Donahoe.
Icahn replied in kind, saying, "We are happy to have reached this détente with eBay and believe that Dave Dorman will be a great addition to the company's board of directors. As chairman of Motorola, Mr. Dorman, working in tandem with our board nominees, guided the company through the successful separation of its mobile device and home businesses, which greatly enhanced shareholder value."
Donahoe and Icahn immediately went into make-up mode by saying the two sides now fully agree on PayPal's potential and that he has great respect for Icahn, who was just trying to ensure shareholder value. Icahn has signed a nondisclosure agreement, so he is unlikely to voice an additional concerns.
This is a far cry from where the two parties were just a few weeks ago when the mudslinging had reached its peak. Icahn had spent months bashing eBay and its board members over alleged misconduct, and eBay had fired back, saying Icahn was attempting to gain control of the company by having Jonathan Christodoro and Daniel Ninivaggi elected to the board of directors.
"Both of them are already on four public company boards, and Mr. Ninivaggi is a co-CEO of one of Mr. Icahn's controlled companies. Mr. Christodoro is a recent graduate of business school with a few years of experience on Wall Street. He joined all four of his boards following Icahn pressure on those companies and has less than one year on average of experience on each board he has served on. Both individuals are contractually bound to Icahn affiliates and are required to hold business opportunities and investments in a fiduciary capacity for the benefit of those Icahn affiliates, preventing them from being truly independent directors," the board said.
Earlier, Icahn in his usual fiery style had said that two current board members were putting their own interests ahead of eBay's and he called Donahoe asleep at the wheel, naive or blind to what was going on inside his own company.
