eBay is arguably the biggest online auction powerhouse and has been for quite a few years now. Back in 2002 it acquired internet payments giant PayPal for $1.5 billion. This move was seen as a way for eBay to increase the number of transactions being processed by PayPal through diversion of its users towards the payments service. Over a decade after the acquisition eBay has now formally confirmed that PayPal will be spun off into a separate company next year.
To ease this transition eBay CEO John Donahoe and CFO Bob Swan will remain onboard until next year. When the split between these two companies does happen and they emerge as separate entities they will be headed by Devin Wenig and Dan Schulman who will take over as CEO of eBay and PayPal respectively.
eBay expects this to happen in the middle of next year. The wheels for this separation were put in motion by activist investor Carl Icahn who started calling for this back in January, his alternative plan included selling off 20 percent of the company through an initial public offering.
The market seems to liked this decision as eBay’s shares rose over 9 percent after this announcement was made. It was a shift from the company’s position just months ago where it stated that the two businesses were better off together.