eBay to spin off PayPal

eBay Chief Executive John Donahoe said Tuesday that a "thorough strategic review" had convinced the company's board that a split between eBay and PayPal was better for the two firms both "strategically and competitively."

In a statement, eBay also announced that the spin-off was planned for the second half of 2015, and that current American Express co-executive Dan Schulman would join PayPal as president and Chief Executive.

Donahoe and Chief Financial Officer Bob Swan were scheduled to oversee the separation, the statement said. But they would not hold executive management roles in the two new companies.

"The industry landscape is changing, and each business faces different competitive opportunities and challenges," Donahoe noted in the statement.

PayPal was founded in the late 1990s and bought by eBay in 2002 for $1.5 billion (1.19 billion euros). The online payment company is based in Silicon Valley, California, and had 143 million active users at the end of 2013 - up 16 percent from the previous year.

Investor pressure

The move marks a reversal of eBay's strategy in the past, which saw the company board resisting investors' demands for a separation.

In January this year, activist investor Carl Icahn, who according to the Reuters news agency owns a 2.48 percent stake in eBay, for the first time called for the separation and PayPal stock market listing. The call came as PayPal's revenues were growing 19 percent last year, twice as quickly as eBay's, thus promising huge profits from going public.

In April, Icahn, however, backed off from his demand after failing to garner enough shareholder support for his plan.

eBay shares jumped 8 percent in early trading at the New York Stock Exchange Tuesday, leading gains in the S&P 500 index.

uhe/chc (Reuters, dpa, AFP)