Ebay Plans To Spin off PayPal
- Updated: September 30, 2014
Shares of eBay Inc (NASDAQ:EBAY) are up 11% in premarket trading after the company announced that it will spinoff mobile payment service PayPal forming two independently traded companies beginning in 2015. Devin Wenig will become CEO of the new eBay following the split, while American Express executive Dan Schulman will assume the same positions with PayPal.
In a company issued statement the company said it had decided that staying together would be less advantageous for both eBay and PayPal.
EBay Chief Executive John Donahoe had resisted demands by activist investor Carl Icahn to hive off the service, saying PayPal was integral to eBay’s business – and vice versa. Icahn backed off from his demand in April.
“As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities,” said Donahoe in a statement. “And we are confident following a thorough assessment of the relationships between eBay and PayPal that operating agreements can maintain synergies going forward.”
eBay said that it has 149 million “active buyers” and that its Marketplaces unit generated $8.7 billion in revenue over the last 12 months — out of $9.9 billion in revenue for eBay as a whole.
PayPal has grown from an online payments business to one that aspires to become your mobile wallet. The business has tinkered with ways for people to use PayPal for real-life transactions in addition to transferring funds online or through its mobile app
eBay (NASDAQ:EBAY) acquired PayPal in 2002 four $1.5 billion.
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