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eBay and PayPal to split into 2 separate companies in 2015

The online auction house is spinning out its payment arm.


Rob Price


Posted on Sep 30, 2014   Updated on May 30, 2021, 12:17 pm CDT

In a statement released on Tuesday morning, eBay confirmed that it will spin off PayPal into a separate, publicly traded company in 2015. Once the split is complete, current eBay CEO John Donahue will step down.

Over the last year, the online auction giant has resisted constant pressure by activist investor Carl C. Icahn to split the two companies, in order to create value for shareholders, the New York Times reports. Despite Donahue’s previous defenses of maintaining eBay and PayPal together as a single entity, he’s now told CNBC that it no longer makes sense to keep the two products united.

“When you look forward, eBay will be less than 15 percent of Paypal’s business three years from now,” Donahue said. “We can achieve many of the benefits of the synergies through arms-length commercial relationships.”

The eBay/PayPal spinoff in one slide.

— Joseph Weisenthal (@TheStalwart) September 30, 2014

It’s a striking about-face on the company’s previous position. In Jaunary 2014, Donahue said, “we and our board believe the besy way to drive long-term shareholder value is to keep eBay and PayPal together, to capitalize on the opportunities. … And the distraction and dis-synergies of seperation would be hapening exactly at the wrong time.” Donahue further proclaimed, “We’re in this window of opportunity of commerce.”

The statement released by eBay gives no indication of how strongly management had previously opposed the spin-off. “Creating two standalone businesses best positions eBay and PayPal to capitalise on their respective growth opportunities in the rapidly changing global commerce and payments landscape,” it reads, “and is the best path for creating sustainable shareholder value.”

Current American Express executive Dan Schulman is to join PayPal immediately, the official statement confirms, and is designated as CEO for the payments company once the separation is complete. The current eBay Marketplaces president, Devin Wenig, will become CEO of eBay once Donahue steps down following the split.

PayPal was founded in 1998, before being acquired by auction platform eBay in 2002. In the immediate aftermath of the announcement, eBay’s stocked jumped 12 percent

 Photo via deargdoom57 (CC BY 2.0) | Remix by Jason Reed

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*First Published: Sep 30, 2014, 8:56 am CDT