Carl Icahn spoke with Bloomberg Television’s Trish Regan today following an open letter to concerning his proposal to spinoff PayPal from eBay Inc (NASDAQ:EBAY).
He singled out Marc Andreessen and Scott Cook saying they are not working in EBay’s best interest: “I think they’re respected. I think they’re accomplished. And I agree mostly they’re value-driven leaders. The trouble is they’re value-driver leaders for themselves, not for eBay and not for the shareholders they have a fiduciary obligation to.”
When asked why John Donahoe doesn’t want a spinoff, Icahn said, “[Donahoe’s] trying to attract really top people. Top people aren’t going to work for John Donahoe.”
*TWO EBAY DIRECTORS VALUE-DRIVEN LEADERS FOR THEMSELVES
*MAKING BOOKS AND DOCUMENTS REQUEST ON SKYPE DEAL
*AFRAID PAYPAL WON’T BE ABLE TO COMPETE IN 3 OR 4 YEARS
*ICAHN SAYS HAVE $1 BILLION INVESTED IN EBAY
TRISH REGAN: Carl Icahn is taking aim at eBay Inc (NASDAQ:EBAY) again, and this time he’s using fighting words. In his latest letter to convince shareholders that eBay’s PayPal unit should be spun off, Icahn accuses the company’s board members of having conflicts of interest, writing, “We believe that in any sane business environment, these directors would simply resign immediately from the eBay board either out of pure decency or sheer embarrassment at the public exposure of the extent of their self-serving activities.”
Well we’re joined by the man himself who penned this letter, Carl Icahn. Carl, always interesting and good to talk to you. I know that you’ve really taken aim specifically at Marc Andreessen and Scott Cook. Why do you say these guys are not working in eBay’s interest?
CARL ICAHN: Well Trish, I’ve been through a lot of these over the last 30, 40 years. And I’ve said in the letter, and I mean it, I have never seen one as – as blatant as this. We’ve seen a lot of them, but it’s almost – if it weren’t sad, it would be funny. And this is one of the troubles with corporate governance in this country and why it’s sort of dysfunctional. Andreessen on the board of this company, who – the company stayed (ph) Marc Andreessen and Scott Cook, who we’ll talk about too, are two of the most respected, accomplished and value-driven leaders in Silicon Valley. And I sort of agree. I think they’re respected. I think they’re accomplished. And I agree mostly they’re value-driven leaders. The trouble is they’re value-driver leaders for themselves, not for eBay and not for the shareholders they have a fiduciary obligation to.
I’ll give you a number that stands out and is almost unbelievable. Skype was going to be sold by Donahoe, who I – I think is either naïve or just asleep at the switch here, and he was going to sell Skype, take it – take it public and take a big chunk for himself. Instead Andreessen on the board, who is greatly respected, basically he and Silver Lake buy most of the company, 70 percent. Now they buy it for a valuation of $2.7 billion. Now I never saw one like this, this big.
REGAN: So they bought it.
ICAHN: Eighteen months later they flip it to Microsoft Corporation (NASDAQ:MSFT), the people who buy it. Silver Lake and Andreessen flip it to Microsoft Corporation (NASDAQ:MSFT) for $8.5 billion. In other words, in those 18 months the shareholders were robbed of $4.5 billion they could have kept. And it wouldn’t be so bad, you would just say well Dohanoe just didn’t – was asleep at the switch, but Andreessen made himself over $150 million on this. And Andreessen wasn’t that wealthy of a man then.
REGAN: Well they’re saying in response, Carl, “The board determined that because of these limited synergies it would be in the best longer-term interest of stock holders to explore a divestiture of Skype.” This is their response to your criticism (inaudible).
ICAHN: Well I got to tell you – I got to tell you, you’ve got to be a little (inaudible) myopic. If you have something for 2.75 that you’re selling it for and a year and a half later, not even, Microsoft buys it – I wonder if anybody really called Microsoft Corporation (NASDAQ:MSFT). We’re going to look into it. We’re – we’re putting out today – in fact you’re the first to hear this. We’re putting out a 220 request, meaning we’re looking for all the books and records. We’re going to thoroughly and diligently investigate whether or not they really did go out and explore everything or just listened to – listened to Andreessen.
Interestingly, right after it Andreessen stated around the time that – that they were doing this that Skype was atypical phenomenon, a breakthrough technology. His partner stated at the time pretty much that Skype is on the way to becoming one of the most important companies in the world. One can only – so I say one can only wonder what happened to Andreessen’s fiduciary responsibility to eBay and what happened to Donahoe? Where the heck is the corporate governance in these companies in our country? I will tell you this —
REGAN: Well they did say –
ICAHN: – that we as large shareholders of mutual funds have a responsibility to make sure really that the rest of the board and the CEO has – has a responsibility. Even with Chesapeake, which got a lot of PR and all, they never – they never sold something. They never – they never sold something – Aubrey never sold something at a $4.5 billion profit to one of his board members. It’s sort of unheard of. And now that I’ve really dug into it – I’ve been a little busy, as you know, with Forest the last couple of weeks. But now that I’ve really got into this, this is phenomenal. And I’m just saying it, and I hope the – I hope the larger shareholders just don’t sweep it under the rug like the company is trying to do. The company is saying —
REGAN: Do you think that some of these companies –
ICAHN: What’s that?
REGAN: Do you think some of these tech companies face a certain struggle or a more specific struggle in that some of the board members – as you try to recruit board members that have an expertise in the area, the reality is tech is somewhat of an incestuous community where people have a hand in this and that, and are they running the risk that they’re putting people in that have these conflicts of interest? Not in eBay, but in Silicon Valley in general.
ICAHN: You know something? I’m not going to go and comment on Silicon Valley. This is just bad form, bad – terrible corporate governance, and it’s bad anywhere. And then I’ll just tell you something else. And I said in the letter another grand slam for Andreessen coming right after this was his investment in Kinetix. Now listen to this one. Ebay sold Kinetix back to its founder for just $31 million in cash from (ph) $467 million. Just that, right? And one year later Andreessen goes in and at that price with that note and everything puts in $150 million. He doesn’t mention – he doesn’t go and tell – tell Dohanoe, why the