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Friday, October 3, 2014

eBay to split PayPal into a separate business

eBay has announced plans to separate its PayPal e-commerce operation from its online auction and shopping business. PayPal was created around 15 years ago and launched on the stock market in 2002. It was acquired by eBay later that year.

In a recently-completed review, the board of eBay said separation would create a sharper strategic focus and would better position each business to capitalise on the growth opportunities offered by a changing competitive landscape. In addition, it noted that the benefits of the current relationship between eBay and PayPal would decline over time.

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John Donahoe, CEO and President of eBay Inc, said “eBay and PayPal are two great businesses with leading global positions in commerce and payments. 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.”

The split is expected to take place in the second half of next year. Afterwards, Devin Wenig, the current president of eBay Marketplaces, will become CEO of the new eBay company.

Meanwhile, Dan Schulman - who’d previously worked at American Express - has been appointed as the new President of PayPal. He’ll also become CEO of PayPal when it separates from eBay.

PayPal currently has more than 152 million active registered accounts. It processed $27 billion (around £18 billion) in mobile payments last year and expects to handle 1 billion mobile transactions in 2014. The eBay mobile app is installed on 200 million devices, generating $20 billion of transactions last year.

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