eBay Inc will no longer run PayPal as a part of its company in 2015, but will adopt a policy where it will be spun off to form its own operation with new separate board control.
Expected in the second half of next year, eBay Inc is to split off the e-payments company following pressure from hedge-fund magnate Carl Icahn, according to The New York Times.
eBay acquired PayPal 12 years ago.
Currently, eBay Inc’s revenue streams are split practically half-and-half between online auction giant eBay’s own operations and that of PayPal, but by splitting the company in two, eBay Inc hopes to create a more secure business model for investors to look upon favourably.
It is understood that Icahn essentially demanded the move to please eBay Inc’s shareholders, as well as to remove any potential conflicts of interest with themselves and PayPal’s own business model.
However, eBay Inc’s chief executive John Donahoe dismissed the idea that there has been any conflict of interest between the two entities. He said the new division will provide new market opportunities for both eBay and PayPal.
“eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets.
“As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities.”
In terms of the future of PayPal as a separate entity, it has announced that Dan Schulman is to be appointed president of PayPal, effective immediately, as well as being CEO-designee of the standalone PayPal company following separation.