Intercontinental Exchange chief defends eBay approach

Intercontinental Exchange “didn’t lose our minds over the weekend” in making an approach for eBay, its chief executive said, as he sought to reassure investors the group was not reaching too far in search of growth.

Investors reacted with confusion this week following confirmation that ICE had discussed a combination with the struggling auction website.

“We aren’t crazy, we didn’t lose our minds,” said Jeffrey Sprecher, who is also ICE’s founder. “We know what our platform does and we know how to lever it. And we feel really good about our ability to continue to find new asset classes.”

Under Mr Sprecher, ICE has become a $50bn behemoth in the stock, futures and bond markets via a series of acquisitions, including the purchase of the New York Stock Exchange in 2013.

However, its shares slumped 8 per cent on Tuesday, its worst one-day performance in a decade, as investors took fright at the prospect it could move from institutional investors to the consumer market. The stock has yet to re-rate and fell another 3 per cent following the publication of its annual results on Thursday.

Mr Sprecher said on a conference call that there were similarities between the two businesses and added he had sought the advice of eBay’s then-chief executive Meg Whitman 20 years ago about building an online marketplace.

Ebay has been under pressure from activist investors upset at its performance relative to competitors such as Amazon and US retail group Walmart. Earlier this week one investor, Starboard Value, said the board had not made enough progress and urged them to sell its classifieds business. 

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The company has already sold its online ticket subsidiary StubHub to rival reseller Viagogo for $4bn and has been evaluating a sale of the classifieds business, which analysts estimate could be worth between $8bn and $12bn. 

“I’m not sure that it’s been fair for the market to hold eBay accountable as an ecommerce company and compare it to the likes of Amazon..[eBay] looks a lot more like the NYSE than Amazon,” Mr Sprecher said.

Kyle Voigt, an analyst at KBW, said that while a deal for eBay would boost ICE’s earnings per share it could also dilute shareholders and change ICE’s shareholder base owing to the very different nature of eBay’s business.

Atlanta-based ICE reported a 4 per cent increase in net revenues to $5.2bn for the year to December 31. Net income fell 3 per cent to $1.9bn.

Operating income rose 3 per cent to $2.7bn but operating margins slipped to 51 per cent from 52 per cent over the same period.


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