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Activist Investing Today: Jackson Calls for eBay M&A

Published: April 22nd, 2020
The manager of technology-focused hedge fund EMJ Capital says he thinks the company should use cash on hand — and proceeds from expected unit sales — to make its own acquisitions.

EBay Inc. (EBAY) is a forgotten tech child that could soon become an “M&A and coronavirus play.”

That’s according to Eric Jackson, an expert on activism and founder of EMJ Capital Ltd., a tech-focused long-short hedge fund.

On the Activist Investing Today podcast, Jackson spoke about how he believes the online marketplace company is poised to sell its classifieds division and Korean marketplace unit, generating up to $16 billion in pretax revenue from the sales.

The well-known investor, who previously launched heavily covered campaigns at Yahoo! Inc. and Viacom Inc., believes eBay could eventually be taken out as an M&A candidate. He doesn’t, however, think selling out too quickly is a good idea. Instead, Jackson contended the company should use cash on hand — and proceeds from expected unit sales — to make its own acquisitions and take advantage of the market downturn.

“If we learned one thing out of the 2008 financial crisis as we look back, it’s that even in the grips of the worst parts of that crisis, say spring of 2009, and even after that, that nadir in the stock market, what it did is it froze up a lot of company boards that didn’t want to do M&A,” Jackson said. “They wanted to hold on to every dollar they had on the balance sheet for fear that we could take a turn for the worse, and yet that was the perfect time to be looking outwards for M&A.”

Jackson said eBay could create more value if it used cash or proceeds from sales to pick off a few companies that have seen their valuations taking a big hit — such as privately held Airbnb Inc., Goat or StockX.

In addition, Jackson said he expected eBay, which has been targeted by Starboard Value LP and Elliott Management Corp., to benefit from the Covid-19 pandemic as shoppers increase their bargain hunting online and businesses seek to expand their e-commerce presence.

Here’s the podcast:

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