14 DAY TRIAL // eBay has decided to split from PayPal and to turn the latter into a secondary independent publicly traded company.
The move will take place in 2015, according to the announcement. The reasons behind the decision are rather clear – PayPal is much more popular than eBay.
While eBay is a Real Player in the ecommerce market, it’s PayPal that steals the show due to the popularity of the payment processor that makes everyone’s lives that much easier.
“eBay Inc. today said its Board of Directors, following a strategic review of the company’s growth strategies and structure, has approved a plan to separate the company’s eBay and PayPal businesses into independent publicly traded companies in 2015, subject to customary conditions,” explains the company.
The board considers that creating two standalone businesses is the best position for both eBay and PayPal to capitalize on as they have different growth opportunities. As the world changes, it would be best for the two companies to work separately in order to not limit each other’s growth.
“eBay and PayPal are two great businesses with leading global positions in commerce and pyaments. For more than a decade eBay and PayPal have mutually benefitted from being part of the one company, creating substantial shareholder value,” said eBay president and CEO John Donahoe.
He adds that, though they split, eBay and PayPal will be sharper and stronger, as well as more focused and competitive, which will also create more flexibility to pursue new partnerships and markets.
As mentioned, the split will take place sometime next year, although a clear timeline has not been provided by the two companies. The transaction will be completed as a tax-free spin-off sometime in the second half of the year, although it will subject to market, regulatory, and other condition.
The new eBay
During one of the meetings held by the board of directors, the company’s growth strategies and structure were assessed. They came to the conclusion that the changing competitive landscape creates huge opportunities for both companies.
There will be some changes at the top level of the company as well. Devin Wenig, president of eBay Marketplaces will become CEO of the new eBay company, where he will lead both Marketplaces and the Enterprise businesses.
Scott Schenkel, chief financial officer of eBay Marketplaces will keep the same position, but he will from then on cover both sides of the company.
The new PayPal
Dan Schulman, former president of the Enterprise Growth Group within American Express, is joining PayPal as president and will keep his position throughout the transition. He has previously held senior executive and CEO roles at AT&T, Virgin Mobile and Priceline.
“Dan has a proven track record of leading complex technology businesses at scale, driving sustainable growth and understanding how to innovate to drive competitive advantage and deliver compelling experiences for customers. I am thrilled to have him lead PayPal forward as a publicly traded, independent global payments leader, and we welcome him to the team,” said Donahoe.
Donahoe and CFO Bob Swan will oversee separation and serve on boards of new independent companies.