After years of speculation, eBay Inc. announced it will finally split off PayPal into a public traded company in the second half of 2015.
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 company said.
Devin Wenig, president of eBay Marketplaces, will become CEO of the “new” eBay company following the separation. The “new” eBay will include the eBay Marketplaces and eBay Enterprise businesses.
American Express executive Dan Schulman joins PayPal immediately as President and CEO designee for PayPal post-separation.
Meanwhile, eBay Inc. President and CEO John Donahoe and CFO Bob Swan will oversee the separation and serve on boards of new independent companies.
In its recently completed review, eBay Inc.’s board of trustees concluded the following:
1. A changing competitive landscape creates enormous opportunities for eBay and PayPal. Separation will create sharper strategic focus and better position each business to capitalize on those growth opportunities as independent companies. The pace of industry change and innovation in commerce and payments requires maximum flexibility to stay competitive and drive global leadership.
2. The benefits of the existing relationships between eBay and PayPal will naturally decline over time and can be optimized in arm’s length operating agreements between the two entities. Arm’s length operating agreements can formalize the existing relationships between the two companies and capture ongoing synergies.
3. This is the best path for delivering sustainable shareholder value. eBay is a leading global commerce platform that has benefited from PayPal, and PayPal is a strong, rapidly growing global payments leader because it has been part of eBay. But beyond 2015, eBay and PayPal will each benefit more and create greater value from the strategic focus, speed, flexibility and agility that come with being independent publicly traded companies.
PayPal facilitates one in every six dollars spent online today, and total payments volume over the last 12 months increased by 26% to $203 billion. PayPal is fully localized in 26 currencies, is available in 203 markets worldwide and has relationships with 15,000 financial institutions. Representative of its global reach, PayPal is the No. 1 payments processor for business to consumer exports for Chinese merchants.
With acquisitions such as Braintree and its new One Touch mobile payments experience, PayPal continues to lead and innovate in mobile payments. One Touch is the industry’s first and only single touch payments experience. PayPal processed $27 billion in mobile payments volume in 2013. PayPal expects to process 1 billion mobile transactions in 2014.