NEW YORK  - Elliott Management has effectively put eBay’s parts up for auction. The activist investment firm may not find it too hard to persuade the $30 billion online merchant to offload its ticket business StubHub, for example. But the big payoff could be selling the marketplace unit – perhaps to a buyer like Walmart.

In 2014, eBay spun off its PayPal unit after tangling with activist Carl Icahn. In recent years, it has also sold stakes in online classified-ad pioneer Craigslist, Latin American e-commerce outfit MercadoLibre, and Indian online grocer Flipkart. So Chief Executive Devin Wenig might be open to disposing of StubHub and eBay’s Classifieds business. Elliott says it has an interest greater than 4 percent – and its demands are echoed by another activist fund, Starboard Value, which has also taken a stake according to the Wall Street Journal.

The logic is that investors aren’t giving eBay enough credit. The company’s shares trade at 12 times estimated earnings over the next year, according to Refinitiv data. That’s in the same locality as troubled bricks-and-mortar retailer Target, and in a different country than Amazon.com , which trades at more than 60 times forward earnings.

The StubHub and Classifieds businesses should both fetch a premium to the eBay enterprise as a whole, which is valued at around nine times estimated EBITDA. StubHub rival Live Nation Entertainment trades at around 14 times that measure of profit. Similar online-listings businesses to Classifieds have sold for over 20 times EBITDA. At the midpoint of the valuation ranges cited by Elliott in its Jan. 22 letter to eBay, separating those two businesses could generate about $7 billion in additional value, or roughly a 20 percent gain in enterprise value.

Elliott also argues the core marketplace business could do better if eBay invests money and time. It has a strong brand, throws off lots of cash and grows about 8 percent annually, even though Amazon has run loops around it for years. Both strategic and financial buyers might be interested, too. One is surely Walmart, which could use a serious boost to its ambitions to keep up with Amazon online.

CONTEXT NEWS

- Elliott Management on Jan. 22 released a letter it had sent to eBay’s board of directors calling for the company to sell or spin off two of its businesses. The activist investment firm, which says it has an interest of more than 4 percent, worth $1.4 billion, in the online-commerce firm, said eBay could double its market value in two years.

- Elliott said the company’s StubHub ticket service could be worth $3.5 billion to $4.5 billion on its own, and eBay’s classifieds businesses could be worth between $8 billion and $12 billion.

- Elliott also called for operational improvements in the company’s core marketplace business, appropriate capital allocation and improvements in management.

- Starboard Value has also taken a position in eBay, according to the Wall Street Journal. The activist fund is making similar demands to Elliott’s, according to the Journal’s source.

(Editing by Richard Beales and Martin Langfield)

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