EBay takes Icahn’s advice to spin off PayPal as payment service sees revenues rocket 19pc
ONLINE auction site eBay yesterday announced plans to spin off its PayPal business in the second half of 2015, saying that to fail to do so would be “less advantageous to each business strategically and competitively.”
The separation will ensure that the independent companies are able to “capitalise on their respective growth opportunities in the rapidly changing global commerce and payments landscape.”
eBay brought PayPal in 2002 for $1.5bn (£925m) and the payments company is now eBay’s fastest growing business, and facilitates one in every six dollars spent online.
PayPal has seen revenues grow at 19 per cent a year and annual revenue of $7.2bn.
While eBay has seen revenues grow at 10 per cent a year and annual revenues of $9.9bn.
It appears calls from activist Carl Icahn earlier this year pushing eBay’s board to separate the two companies may have been well warranted as eBay saw shares jump 7% today.
John Donahoe, president and chief executive of eBay, commented that the split would ensure that “eBay and PayPal will be sharper, stronger, more focused and competitive as leading, standalone companies”.
Donahoe and eBay’s chief finance officer Bob Swan will be responsible for leading the separation, although neither will have an executive management role in the new companies.
PayPal’s president and CEO will be Dan Schulman, who joins from American Express where he is president of the company’s Enterprise Growth Group. Devin Wenig will take over as CEO of eBay, he is currently president of eBay Marketplaces.