UPDATE 2-Icahn, eBay trade barbs as feud over governance escalates

Wed Feb 26, 2014 1:55pm EST

By Sam Forgione and Phil Wahba

NEW YORK Feb 26 (Reuters) - Billionaire investor Carl Icahn and eBay Inc took their war of words up a notch on Wednesday.

Icahn, who last month called for eBay to sell off its fast-growing PayPal payments business, called corporate governance at the e-commerce giant "dysfunctional" in his second letter to eBay shareholders this week.

The activist investor, who has a 2.15 percent stake in eBay, promised to lay out a detailed case for spinning off fast-growing PayPal in coming weeks. He sent an open letter to eBay shareholders this week accusing two company directors of conflicts of interest.

"We believe corporate governance at eBay is dysfunctional. Let's end this charade," Icahn said in his latest letter to eBay shareholders. He urged shareholders to vote for his slate of directors and in favor of his spinoff proposal at eBay's annual shareholder meeting this year.

EBay responded with a statement headlined "Stick to the facts, Carl" and accused him of deliberately spreading claims that are "dead wrong."

Icahn said on Monday that two longtime board members, Marc Andreessen and Scott Cook, had business interests that directly competed with eBay. ]

"Carl Icahn doesn't let the truth get in the way of a good story," eBay said in response to Icahn's latest letter.

Icahn, chairman of Icahn Enterprises L.P., is known for taking large stakes in companies and pushing for management change. He was not immediately available for comment.

EBay shares were up 2.6 percent to $57.60 in afternoon trading.

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