eBay has tweeted plans to separate itself into two distinct companies, eBay Inc. and PayPal.
eBay Inc. to separate eBay and Pay into independent companies in 2H 2015 https://t.co/ktEvhWFdt0
— eBay Inc. (@ebayinc) September 30, 2014
A report on Buzzfeed said that after eBay convinced billionaire activist investor Carl Icahn to stop his development of creating a PayPal spinoff in April; the company announced Tuesday morning via a tweet that PayPal will be made into an independent company in the next year.
PayPal has made up a bigger portion of the combines company's revenues and transaction volume since the 2002 acquisition, hence the split.
It accounts for 42% of the $17 billion revenue in the last year and growing much faster than the revenue from the eBay marketplace business.
PayPal brought in only a little over a quarter of the combines company's total revenue in 2010.
"Our record shows that our involvement with boards and management has greatly enhanced long-term value for all shareholders, and we hope and believe this will continue with eBay," Icahn said in a statement.
Icahn owns about 2.5% of eBay's shares
PayPal also has a collection of payment companies that have little to do with the main eBay business and run under Braintree; the still independent payment processing company it acquired in 2012. Braintree owns the popular peer-to-peer payment company Venmo.
eBay said in a presentation that an independent PayPal would be a "payments leader with unmatched payments platform, global scale and risk management."
President and CEO John Donahoe, said in a statement: "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."
According to a New York Times report, Donahoe will step down after the spinoff.
"eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets," Donahoe added in the report.
