Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


EBay plans PayPal spinoff in 2015

01 October 2014, 08:41

New York - EBay said it would spin off PayPal, its fast-growing payments business, into a publicly traded company in the second half of 2015, marking an about-face for the company.

The news of the tax-free spinoff to shareholders sent eBay's shares up 10% to $58.15 in premarket trading.

EBay chief executive John Donahoe had previously resisted demands by activist investor Carl Icahn to hive off the service, saying PayPal was integral to eBay's business, and vice versa.

Icahn, eBay's sixth-largest shareholder with a 2.48% stake as of June 30, backed off from his demand in April. He also withdrew his two nominees to eBay's board, but in a concession, the company added a 10th independent director.

Donahoe acknowledged in an interview with the New York Times on Tuesday that eBay was following Icahn's recommended strategy. But he contended the company arrived at its conclusion through "a deliberate process" and not by reacting to outside pressure.

"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," Donahoe said in a statement.

EBay said revenue in its marketplaces and enterprise businesses increased 10% to $9.9 billion in the last four quarters, while PayPal's revenue rose 19% to $7.2bn.

"By separating marketplace and PayPal, it could make marketplace more attractive as an acquisition, which is something that investors have been thinking about since Alibaba's IPO," PiperJaffray analysts wrote in a research note.

After the spinoff, the new eBay will be headed by Devin Wenig, president of eBay marketplaces and former head of the markets division of Thomson Reuters Corp.

PayPal's chief executive after the spinoff will be Dan Schulman, former head of American Express Co's online and mobile payment business.

EBay's CEO Donahoe and chief financial officer Bob Swan will oversee the separation and serve on the boards of both companies.

The PayPal business faces competition from Google Inc's Google Wallet and a number of other vendors. Apple Inc is scheduled to enter the online payments market next month with its newly unveiled service, Apple Pay.

"On PayPal, investors will still contemplate the risk of PayPal directly competing with Apple Pay and Google Wallet, which will likely add some uncertainty to PayPal's standalone valuation," PiperJaffray analysts said.

EBay had a market value of $65.36bn as of Monday's close.

PayPal was founded in the late 1990s and went public in 2002. It was acquired by eBay soon afterward for $1.5bn.

PayPal has more than 152 million active users and accounts grew 15 percent last quarter.

For the latest on national news, politics, sport, entertainment and more follow us on Twitter and like our Facebook page!

- Reuters

Tags paypal ebay

Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Submitted by
Wilson Ochieng
DP Ruto accuses Raila of selling ...

DP Wiliam Ruto has castigated Raila Odinga for seeking western support to fund his 2017 election bid. Read more...

Submitted by
William Korir
Peter Kenneth announces Uhuru 201...

Peter Kenneth has announced that he will support President Uhuru Kenyatta in the 2017 elections. Read more...

Submitted by
Wilon Ochieng
Labour Party to dump both Jubilee...

The Labour Party of Kenya is likely to avoid supportoing both the CORD and Jubilee factions during the 2017 General Elections. Read more...

Submitted by
William Korir
Ukambani MP quits Jubilee, to run...

An Ukambani MP has quit the Jubilee Party, citing voter apathy as his reason behind leaving the ruling coalition. Read more...

Submitted by
Victor Tinto
Government launches probe into Po...

The government has launched an inquiry into the circumstances that could have led to two National Police Service helicopter accidents in August and September this year. Read more...

Submitted by
Wilwon Ochieng
Deputy Governor's ally found with...

The EACC has recovered KES 2 million in fake currency from a close ally of Deputy Governor for Tharaka Nithi Eliud Mati. Read more...