After a strategic review, eBay has announced plans to spin off PayPal as a separate business in 2015. The e-commerce giant's board of directors is touting the separation as a means of enhancing each brand's growth opportunities while boosting shareholder value.
"EBay and PayPal will be sharper and stronger, and more focused and competitive as leading, stand-alone companies in their respective markets," said eBay CEO John Donahoe. "As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities."
Expected to take place in the second half of 2015, the tax-free split will be managed by Donahoe and CFO Bob Swan, both of whom will serve on the boards of the newly independent companies. The current president of eBay Marketplaces, Devin Wenig, will assume the role of CEO of the new eBay company. Scott Schenkel, current CFO of eBay Marketplaces, will serve as CFO of the new eBay company.
The company has also named Dan Schulman as the new president of PayPal; he will serve as CEO of the independent PayPal company. Schulman previously held executive roles at American Express, AT&T, Priceline and Virgin Mobile.
News of the spinoff—which financial activists like Carl Icahn strongly recommended—comes on the heels of PayPal’s acquisition of mobile payments company Braintree. As an independent company, PayPal will likely continue its focus on mobile and alternate payment developments.