EBay asks shareholders to veto Icahn's PayPal spin-off proposal

EBay Inc urged its shareholders to vote against activist investor Carl Icahn's proposal to spin off the e-commerce company's PayPal payments unit.

Last week, Icahn asked eBay to sell 20 per cent of the PayPal payments unit in an initial public offering, a change in tack from his previous call for a complete spin off.

"Our shareholders and our customers are best served by keeping PayPal and eBay together," eBay's board said in a letter to shareholders.

Icahn has said selling off only part of PayPal would retain the benefits of a stand-alone PayPal while maintaining the efficiencies of having eBay and the payments unit together.

EBay reiterated its stance that the company and PayPal were reliant on each other for growth, especially in "today's competitive environment."

"Our commerce and payments businesses reinforce and support each other. Taking them apart would destroy value by reducing their considerable synergies, which cannot be easily replaced by arm's length commercial agreements," the company said.

Shares of eBay were up 0.4 per cent at $56.76 in early trading on the Nasdaq.