eBay to Split up with Paypal
eBay has recently announced that it plans to split its Paypal business into a separate company by 2015. The move has been backed by a minority shareholder Carl Icahn for sometime though his initial proposal failed in April of this year.
Once they are separated, Devin Wenig – the current president of eBay Marketplace will become the new CEO of eBay and Dan Schulman who was previously the President of American Express is joining the company to become President of PayPal.
PayPal and eBay had mutually benefited from working together for more than a decade but it is understood that it will become less advantageous to each company if they were to continue as one entity.
“EBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets,” current eBay president and CEO John Donahoe stated.
This is a bit of a turn in events however as just six months ago Donahoe argued against calls for a split saying that it wasn’t a good idea. He is not expected to have a management role in either company after the split.
Business splits have come into the spotlight in recent years as companies have looked toward simplifying their businesses to please shareholders looking for more tightly focused operations. The demand is brought on by activist shareholders who buy positions in companies and call for changes in order to drive up the stock prices.
