Ebay And PayPal To Become Separate Standalone Companies in 2015

Online auction site eBay announced today that its board of directors approved a plan to split eBay and PayPal into independent publicly traded companies in 2015. By spinning PayPal off into its own business, the board feels both companies will be in a better position to capitalize on their respective growth opportunities.

"eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets," said eBay Inc. President and CEO John Donahoe. "As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities. And we are confident following a thorough assessment of the relationships between eBay and PayPal that operating agreements can maintain synergies going forward. Our board and management team believe that putting eBay and PayPal on independent paths in 2015 is best for each business and will create additional value for our shareholders."

eBay and PayPal
Image Source: Flickr (Karlis Dambrans)

The decision to split up came after eBay conducted a strategic review of both firm's growth strategies and structures. This is something eBay's board of directors does on a regular basis, and apparently they've been considering a separation of eBay and PayPal for some time now.

Investors are happy with eBay's decision, as the company's stock rose by as much as 8 percent following news of the split. Carl Icahn, eBay's sixth-largest shareholder with a 2.48 percent stake in the company, should be particularly pleased -- he argued for a split earlier in the year.