Activist investor Carl Icahn has asked eBay to spin off its payment processing system PayPal, which analysts consider to be the e-commerce giant's crown jewel, into a separate company.
The US billionaire had earlier acquired a 0.8% stake in eBay and nominated two board members on his behalf.
Icahn thinks that a spin-off of PayPal would boost its growth in line with the significant rise in online payments in the recent period.
PayPal, owned by eBay, is an international e-commerce business allowing payments and money transfers to be made through the internet. The business is set to overtake eBay's online marketplace business in terms of revenues, as its footprint spreads at a rapid clip.
The marketplace generated $8.3bn (£5bn, €6.1bn) in revenues last year, representing an on-year growth of 12%. Meanwhile, revenues at PayPal increased by 19% to $6.6bn, as its number of users increased to 142.6 million from 128.1 million.
eBay Not Thinking of Split Up
In a response to Icahn's proposal, eBay noted that it has decided to go ahead with its current business strategy.
"Regarding Mr. Icahn's separation proposal, eBay's Board of Directors routinely assesses the company's strategic direction and has explored in depth a spinoff or separation of PayPal. EBay's Board of Directors has concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value," the company said in a statement.
"As part of eBay Inc., PayPal is able to leverage the company's technology capabilities, commerce platforms and relationships with retailers, brands and large merchants worldwide. Payment is part of commerce, and as part of eBay, PayPal drives commerce innovation in payments at global scale, creating value for consumers, merchants and shareholders."
John Donahoe, chief executive of eBay said later in an interview that the company's assets "drive more growth and more success together, than apart."
Icahn's Tech Love
The activist investor has recently been acquiring stakes in technology companies, as analysts predict the technology sector would be the key for investors in the near future.
Icahn has so far invested $3bn in Apple, including the recent $500m investment, which prompted the iPhone maker to repurchase more of its shares to counter possible pressure from the investor.
He previously acquired a nearly 10% stake in video service Netflix in late 2012, and attempted to force a sale of the company. Icahn later gave up his attempt after reaping $800m from selling Netflix stock that soared due to the so-called "Icahn lift".
Icahn also bought a stake in personal-computer maker Dell in an unsuccessful bid to stop the company from going private under a deal led by founder Michael Dell.