Scott Eells—Bloomberg/Getty Images
March 19, 2014 4:34 PM EDT

Activist investor Carl Icahn has hatched a new plot in his ongoing quest to get eBay to spinoff its online payment service PayPal. In a letter to eBay shareholders released Wednesday, Icahn advocates for a partial IPO of PayPal, in which eBay would sell off 20 percent of the company in a public offering. “PayPal is a tremendous company, but it is on the verge of going to war against strong adversaries, and only with the benefits of being an independent company…will PayPal be capable of winning that war.,” Icahn writes in the letter.

The missive rattles off several reasons that a PayPal IPO makes sense from Icahn’s view. An independent PayPal would create greater value for shareholders, he argues, and money raised from the offering could be used to recruit more talent and make strategic acquisitions. An independent management team and board of directors would also benefit PayPal, Icahn says, because the company would be able to more easily pursue partnerships with companies that could potentially threaten eBay’s business. Icahn also imagines that other tech companies that are hungry to enter the online payments space, like Facebook, might buy a stake in PayPal if given the opportunity.

The proposal is a step back from Icahn’s original hope of getting PayPal to go entirely independent. But eBay still has no interest in parting with even a portion of the payments service. “We continue to believe PayPal and eBay together is the best path to creating sustainable, long-term shareholder value in the future,” the company said in an emailed statement, noting that eBay’s share price has risen by more than 400 percent in the past five years. “Together, PayPal and eBay have strong, real synergies that benefit both businesses. These synergies cannot be easily addressed in arm’s length commercial agreements.”

The issue is expected to be presented for a vote at eBay’s annual shareholders meeting this spring.

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