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Ebay To Split Off Paypal Online Payment Business - Business - Nairaland

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Ebay To Split Off Paypal Online Payment Business by msmon(m): 1:58am On Oct 01, 2014
E-commerce site eBay is planning to
split off its payments system PayPal
into a separate company.
News of the move, which is expected to
be completed in the second half of 2015,
sent eBay's shares 7.5% higher.
It is a reversal of strategy for the
company, which has previously resisted
pressure to split. However, the boss
John Donahoe said the logic for
running the companies jointly had
changed.
PayPal's revenues are growing at 19% a
year, twice as quickly as eBay's.
Its payment system is available in 203
markets worldwide and is expected to
process one billion mobile payments this
year.
PayPal's annual revenue is $7.2bn
(£4.5bn), while eBay's is $9.9bn and is
growing at 10% a year.
"A thorough strategic review... shows
that keeping eBay and PayPal together
beyond 2015 clearly becomes less
advantageous to each business
strategically and competitively," EBay's
chief executive John Donahoe said.

*Resistance

Earlier this year the activist investor
Carl Icahn began pressing for eBay to
sell PayPal, a plan that was resisted by
the eBay board. He stopped pushing
after failing to gain enough support.
"We are happy that eBay's board and
management have acted responsibly
concerning the separation - perhaps a
little later than they should have, but
earlier than we expected," said Mr
Icahn in a statement on Tuesday.
He added the separation will
"meaningfully enhance value for all
shareholders".
Analysts cheered the move, because it is
seen as strengthening PayPal's position
as more e-payment systems, such as
Apple Pay and Alibaba's Alipay, enter
the marketplace.
"Breaking off from eBay will provide
PayPal with more autonomy to compete
in the payments space, particularly with
respect to Apple Pay and other
emerging mobile wallet providers,"
wrote online advertising analytics firm
eMarketer in a note.
EMarketer estimates that in the US,
mobile payments using smartphones will
reach $3.5bn in 2014 and then balloon
to $118bn by 2018.

*Leadership change

EBay bought PayPal in 2002 for $1.5bn,
and the payments company is now
eBay's fastest-growing business, with
143 million active users at the end of
2013, up 16% from a year earlier.
PayPal's new president and chief
executive will be the current American
Express co-executive Dan Schulman.
Meanwhile, Devin Wenig, currently
president of eBay Marketplaces, will
become the new chief executive of eBay.


m.bbc.com/news/business-29423251

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