eBay Inc’s acquisition of PayPal in the aftermath of dot-com bubble back in 2002 for a sum of $1.5 billion raised several questions in the tech industry, most specifically: should a company as humongous as PayPal work as a subsidiary of another giant. eBay Inc. decided not to trade PayPal as a separate entity at that time but the latest announcement from trade giant this Tuesday could mean that it has been busy reconsidering its options.
Via an official blog-post, eBay Inc. announced that its board of directors, after a strategic review, has approved the plan to split its e-commerce and consumer-to-consumer sales service eBay, and the online payment solutions service PayPal into independent publicly traded companies in 2015.
“As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities. And we are confident following a thorough assessment of the relationships between eBay and PayPal that operating agreements can maintain synergies going forward,” remarked eBay Inc. President and CEO John Donahoe. “Our board and management team believe that putting eBay and PayPal on independent paths in 2015 is best for each business and will create additional value for our shareholders,” he continued.
Dan Schulman, a once-experimentally-homeless, payments and enterprise veteran from American Express—who only recently joined PayPal as President—will lead as the Chief Executive Office of PayPal following the planned separation of two businesses. Devin Wenig, who currently leads the eBay, Classifieds and StubHub businesses for eBay Inc. will become the CEO of newly-independent eBay after the split. eBay Inc. President and CEO John Donahoe and CFO Bob Swan will oversee the separation and serve on boards of new independent companies.
With the spilt, eBay Inc. aims to rivet the strategies for both of the companies separately in the face of “changing competitive landscape”, and considers it to be the best path for delivering “sustainable shareholder value”. The decision, of course, stays subject to the market, regulatory and other relevant conditions but the company expects to complete the transaction as tax-free spinoff somewhere in the second half of 2015.
—Images courtesy: BBC, eBay, TechnologyReview