EBay, PayPal to Split: It Is Done With The Intention Of Both Companies To Progress Faster In Their Respective Markets

EBay, PayPal to Split: It Is Done With The Intention Of Both Companies To Progress Faster In Their Respective Markets

It is final. The two companies decided to go their separate ways as PayPal moves out under the supervision of EBay forming its new organization. It is done with the intention of both companies to progress faster in their respective markets. The separation process will last up until the second half of 2015 when all the regulators sign- off the agreement.

Cited by investor activist Carl Icahn, he already predicted this event way before it has been implemented. Seeing Ebay focusing on online commerce, while PayPal wants to be the leading company in online payments, the separation that he pushed publicly and behind the scene is happening now. Both companies will get each of their own respective CEO for their agreement;  eBay Marketplaces President Devin Wenig will be the Ebay CEO while PayPal President Dan Schulman will preside at PayPal.

"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."    Donahoe said in a statement today. (Source: Forbes.com) As he will step down but still holding his chair from both companies.

After he said that EBay will spin off PayPal under its umbrella, it is still a drastic reversal for them. Icahn once said that "Paypal's a jewel and Ebay is covering up its value", "If you just went out and took it public you'd get a huge premium because of growth." He added, but Donahoe seems to disagree and he said "Ebay has accelerated and enhanced PayPal's success, allowing it to be more aggressive, bolder and to take more risk than if it was separate."

As the numbers shown by Ebay, PayPal was holding one in every dollar spent online, and from spinning off from its previous merger, it simply shows a possibility of a bigger increase of numbers, for them to be a sole intermediate independent online payment facilitating company would be easier. And while Ebay continues to be one of the leading company that focuses on online commerce. 

 

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