Intercontinental Exchange Inc (ICE), the operator of the New York Stock Exchange, has recently made an approach to eBay Inc to explore potential opportunities for collaboration. ICE, known for its expertise in running markets, aims to leverage its technological capabilities to enhance efficiency on eBay’s global platform, which facilitates transactions between buyers and sellers around the world. The news of ICE’s interest in eBay comes amidst speculation of a potential takeover, with the deal potentially exceeding $30 billion.

However, ICE released a statement clarifying that eBay has not engaged in substantive negotiations, and as of now, no discussions are taking place regarding the complete or partial sale of the company. The Wall Street Journal reported that ICE is not particularly interested in acquiring eBay’s classified ad unit, which eBay has been contemplating selling. eBay declined to comment on ICE’s approach.

Following the announcement, eBay’s shares closed 8.7% higher at $37.41, resulting in a market value of $30.4 billion. Conversely, ICE’s shares experienced a 7.5% decline, closing at $92.59 and leading to a market value of $51.6 billion. Investors expressed concerns about the potential dilution of ICE’s stock if a deal were to proceed.

ICE, which operates futures exchanges and clearing-houses in addition to the New York Stock Exchange, has been under pressure from US regulators to reduce its operating fees for financial markets. This regulatory pressure has prompted the company to diversify its business operations.

The expressed interest from ICE in acquiring eBay has raised investor questions about whether eBay should expedite the divestment of its classifieds business, which promotes the sale of products and services outside of the eBay marketplace. Activist shareholder Starboard Value LP has continuously advocated for eBay to sell its classifieds business, arguing that the company must implement more aggressive strategies to enhance shareholder value.

In response to these concerns, eBay has announced that it will review Starboard’s letter and perspectives. To better compete with e-commerce giants like Amazon.com Inc and Walmart Inc, eBay has been focusing on its advertising and payments businesses. In the past, eBay faced pressure not only from Starboard but also from hedge fund Elliott Management. As part of a settlement, eBay granted a board seat to Jesse Cohn from Elliott and Matt Murphy, President, and CEO of Marvell Technology (backed by Starboard). Additionally, eBay conducted a strategic review of its business, resulting in the sale of StubHub for $4.05 billion in cash.

The progress of eBay’s classifieds business, valued between $8 billion and $12 billion by Elliott, is expected to be updated to investors this year.

Useful links:
1. The Wall Street Journal: Intercontinental Exchange Approached eBay About Potential Takeover
2. Reuters: Intercontinental Exchange approached eBay for potential takeover