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eBay and PayPal to be Separate Companies
It was announced on Sept. 30, that eBay Inc., the pioneering e-commerce market headquartered in San Jose, Calif., that had revenues of $4.4 billion in its second quarter of 2014, intends to spin off its PayPal division, which handles one in every $6 spent online, according to a PayPal statement.
eBay acquired PayPal in 2002. eBay executives forecast that PayPal and eBay will emerge as two separate, public companies in the second half of 2015, according to a company statement.
John Donahoe, eBay’s president and chief executive officer, said that the separation would make both companies more agile competitors.
“For more than a decade eBay and PayPal have mutually benefited from being part of one company, creating substantial shareholder value. However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively. The industry landscape is changing, and each business faces different competitive opportunities and challenges,” Donahoe said in a company statement.
The announcement of the split follows on the heels of a tough year for eBay. Carl Icahn, the activist shareholder and investor, was engaged in a proxy contest at eBay in the first half of 2014. Icahn proposed splitting the PayPal business from eBay and also demanded that his slate of two nominees join the company’s board of directors.
Icahn withdrew his proposal in April. However, his slate joined the board.
A Sept. 30 note from IBISWorld, an Australian research company, stated that the highly competitive payments industry will become more competitive as more companies offer payment options such as digital wallets. Apple Inc recently debuted its Apple Pay mobile payments service.
