ebay and PayPal to become independent after July 17
On Friday, e-commerce gaint eBay announced that it is separating from payment processing company PayPal on July 17. The plan to work separately was announced last year and came after months of pressure from activist investor Carl Icahn. He attacked eBay for poor management and claimed that keeping eBay tied with PayPal depressed the value of both units.
John Donahoe, president and chief executive of eBay said, "eBay and PayPal are two great, special businesses. As separate, independent companies, eBay, led by Devin Wenig, and PayPal, led by Dan Schulman, will each have a sharper focus and greater flexibility to pursue future success in their respective global commerce and payments markets".
PayPal was acquired by eBay in 2002 for roughly $1.5 billion in shares. The deal was made to boost PayPal transactions by driving auction participants toward the online payment service.
Although PayPal has expanded beyond a simple payment mechanism for eBay auctions over the years, Icahn argued that PayPal need to change to compete better in the fast-moving online payments segment.
PayPal processed $235 billion in payments in 2014 and handled one billion mobile transactions. It had revenues of $8 billion last year and worked with 10 million merchants worldwide.
Donahoe added that he is confident both the companies have the right leadership team, strategy, structure and operational discipline to create sustainable, long-term value for stockholders. This will help them deliver great opportunities and experiences for customers worldwide.
PayPal will be listed on the NASDAQ under the ticker PYPL, while eBay will continue to be traded on the NASDAQ under the ticker EBAY.