EBay, the world's biggest online marketplace, said it would split off its payments arm PayPal, finally bowing to pressure from activist shareholder Carl Icahn after nine months.
EBay and PayPal will become independent companies in 2015, subject to customary conditions, the San Jose, California-based company said in a statement. Chief Executive Office John Donahoe, who said in March a full separation was not a good idea, won't have an executive management role in the businesses.
Donahoe had sparred with Icahn for two months at the beginning of the year after the billionaire bought a stake in the company in January, and the clash took an hostile tone until a settlement in April. Creating standalone businesses will allow each to capitalize on their respective growth opportunities and is the best way to create sustainable shareholder value, EBay said today.
In January, EBay's breakup value was pegged by analysts and investors at about $69 a share. The stock jumped 9.5 percent to $57.68 before the markets opened today. EBay, whose online marketplace sells everything from motorcycles to golf clubs via auctions and at fixed prices, bought PayPal in 2002 to add online-payment services. The unit almost tripled sales in the five years ended in 2012.
Devin Wenig, currently president of EBay Marketplaces, will become CEO of the new EBay company. Dan Schulman, who is joining PayPal from American Express, will be president of PayPal, effective immediately, and CEO-designee of the standalone PayPal company following separation.
To help the transition, Donahoe and Chief Financial Officer Bob Swan will be responsible for leading the separation of each business, with board oversight.