eBay’s board of directors has approved a plan to separate the company’s eBay and PayPal businesses into independent publicly traded companies in 2015, subject to customary conditions. eBay says creating two standalone businesses best positions eBay and PayPal to capitalize on their respective growth opportunities in the rapidly changing global commerce and payments landscape, and is the best path for creating sustainable shareholder value.
The move comes 12 years after eBay bought Paypal for $1.5 billion after Paypal became the way most people paid for items bought on eBay. Eventually, eBay required users to use Paypal. Roughly half of eBay’s revenues are now generated by Paypal.
“eBay and PayPal are two great businesses with leading global positions in commerce and payments,” said eBay Inc. President and CEO John Donahoe. “For more than a decade eBay and PayPal have mutually benefited from being part of one company, creating substantial shareholder value. However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively. The industry landscape is changing, and each business faces different competitive opportunities and challenges.
“eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets,” Donahoe continued. “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. 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.”
eBay says separation will create sharper strategic focus and better position each business to capitalize on those growth opportunities as independent companies.
The company expects to complete the transaction as a tax-free spin-off in the second half of 2015, subject to market, regulatory and certain other conditions.
Devin Wenig, currently president of eBay Marketplaces, will become CEO of the new eBay company. As CEO of eBay, Wenig will lead the eBay Marketplaces and eBay Enterprise businesses. Revenue over the last twelve months1 for these two businesses grew approximately 10% year-over-year to $9.9 billion, with eBay Marketplaces accounting for about $8.7 billion. eBay Marketplaces and eBay Enterprise collectively handled approximately $85 billion of gross merchandise volume and gross merchandise sales, which grew 13 percent year over year. Scott Schenkel, currently the CFO of eBay Marketplaces will become the CFO of the new eBay company.
eBay has more than 700 million live listings at any given time.
Concurrent with the announcement of the business separation plan, the company also announced the appointment of Dan Schulman to be President of PayPal, effective immediately, and CEO-designee of the standalone PayPal company following separation.
Schulman joins PayPal from American Express, where he was president of the company’s Enterprise Growth Group. A seasoned leader in multiple industries, Schulman has held senior executive and CEO roles at AT&T, Priceline and Virgin Mobile, prior to joining American Express.
Here’s what eBay told users via its announcements board:
The creation of independent eBay and PayPal businesses will take up to 12 months to complete so this has no immediate impact on your account. Likewise, you can continue to count on everything you expect from eBay today. Innovation, value, trust, selection, and global reach will remain central to our business. And we will continue to work closely with PayPal to ensure payments remain a seamless part of the eBay experience.
As an active customer, you help make eBay what it is. eBay has always been more than a store. It is a community of people—buyers and sellers—connecting around the world. Thank you for being part of this amazing community.
As we begin this next chapter of the eBay story, you have our commitment to make sure people like you remain at the heart of everything we do. We are excited by the opportunity ahead and look forward to working with you in the future.