eBay To Split Paypal Into A Separate Company in 2015
eBay has announced a plan to make Paypal a separate, publicly traded company in 2015.
The move was initially proposed by minority shareholder Carl Icahn in January 2014. Icahn suggested that spinning off PayPal from eBay would be beneficial for both companies and it would help in raising needed capital. He claimed that it would also help PayPal in competing in increasingly crowded digital payments industry.
However, the proposal was rejected by eBay in April. eBay stated that both companies were better together and it wasn’t a good idea to split. Icahn accepted their decision but was firm in his belief that the move will benefit both companies in future.
“I continue to believe that eBay would benefit from the separation of PayPal at some point in the near future and intend to continue to press my case through confidential discussions with the company,” said Icahn said in April.
Now eBay has finally seen what Icahn saw months ago. eBay CEO John Donahoe, who was against Icahn’s proposal, said that the company performed a strategic analysis and has come to believe that it would be a good idea strategically and competitively to separate both companies in 2015.
Devin Wenig, who is currently the president of eBay Marketplaces, will become CEO of the new eBay company. On the other side, Dan Schulman has already been announced the president of PayPal. PayPal is already the biggest player in online payments industry. With acquisitions like Braintree and innovating new services like OneTouch — that gives single-tap payment experience to the users — PayPal expects to process 1 billion mobile transactions in 2014.
“Together, eBay and PayPal have delivered substantial value creation for our shareholders,” Donahoe said. “We believe eBay and PayPal will continue to do so as separate, independent companies. Tremendous opportunities exist for each business.”
Both companies have generated huge amount of revenue for a decade working as one, but now both need to focus on their own domain, especially PayPal. The newest entry in the digital payments industry is Apple. PayPal acknowledged that Apple has been successful in almost every domain they have targeted so far, and also released a full-paper ad to mock Apple on its photo-leaks scandal.