Icahn Attacks EBay, Calls Governance ‘Dysfunctional’

Activist investor Carl Icahn escalated his attack on EBay Inc. Chief Executive Officer John Donahoe and the company’s board, calling its governance “dysfunctional” and riddled with conflicts.

Icahn, the billionaire who last month proposed that EBay spin off its PayPal unit, sent his second letter to shareholders in three days, highlighting the competing interests of directors Marc Andreessen and Scott Cook.

Related: Billionaire Investor Icahn Says EBay Conflict Is 'B.S.'

“There is no question that they are accomplished and value-driven, but we believe the primary problem, among other things, is that they appear to be value-driven for themselves,” Icahn wrote today, reiterating his call for investors to vote for two new directors and support a separation of EBay and PayPal. “Let’s end this charade.”

Icahn, 78, said that Andreessen, a venture capitalist, unduly profited from EBay’s sale of videoconferencing-company Skype while he was on the board by participating in the acquisition of the unit and then selling it to Microsoft Corp. at a much higher price. Cook is a director at Intuit Inc., a company Icahn said is a “fierce” EBay competitor.

EBay stood by the directors and called Icahn’s claims “blatantly false” in a statement today. The company said Andreessen’s venture firm had a stake of about 3 percent in Skype and that he recused himself from deliberations on the transaction.

“Mr. Icahn seems to be deliberately disseminating claims that are dead wrong,” EBay said. “We challenge Mr. Icahn to end his own charade with our shareholders. Let’s focus on honest, accurate debate.”

EBay, based in San Jose, California, rose 2.1 percent to $57.34 at the close in New York. The shares have gained 4.5 percent this year.

To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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