eBay and PayPal Two Separate Companies from Now
PayPal, a wholly owned subsidiary of eBay from now will trade as two separate companies. Soon after the split from eBay, PayPal listed independently on the stock exchange.
Thirteen years after it acquired PayPal in a $1.3 billion deal, eBay has spun off the lucrative digital payments business and has decided to face the competitive e-commerce world on its own.
The split of both the companies have come more than ten years after eBay bought the payments firm in 2002. Last year in September eBay announced its plans to divide the two companies, and letting PayPal off into a separate entity.
eBay Chief Executive John Donahoe said in a statement that the company decided to take such a decision because it thought it was best for each business and would create additional value for shareholders. He further said that both the companies will continue to work closely together.
The split has left the two firms' top executives free to focus on their individual businesses.PayPal will start trading on the NASDAQ as an independent company while eBay will continue as its own separate public company.
As per analysts, PayPal is expected to be valued at around $44bn. The spinoff will allow PayPal to grow more quickly and compete more aggressively in the mobile payments space, they said.
According to company filings, PayPal in 2014 generated $7.9 billion, nearly half of eBay Inc.’s total revenue, and its growth outpaces any other division of eBay.
Scot Wingo, e-commerce analyst and executive chairman of ChannelAdvisor stated that eBay is in a much bad position presently than PayPal.
eBay, which was founded 20 years ago has succeeded in adapting to the changing Internet world. But now it was losing customers to Amazon.com, its mobile and Web technologies have been widely criticized.
Bill Smead, CEO of Smead Capital Management, said, “We think that (eBay’s) marketplaces business has the most to gain in the split-up”.