Carl Icahn got what he wanted. The activist investor has been pushing for eBay to spin off PayPal and yesterday brought news that the two companies will become standalone entities sometime in 2015.
"As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities," said John Donahoe, president and CEO of eBay, Inc., in a statement. "We are confident following a thorough assessment of the relationships between eBay and PayPal that operating agreements can maintain synergies going forward."
Mr. Donahoe plans to step down after the companies split next year. Devin Wenig, president of eBay Marketplaces, will become the CEO of eBay. The new company will include eBay Marketplaces and eBay Enterprise.
Today, eBay has more than 149 million active buyers and sellers have more than 700 million live listings with about three-quarters of those being new. The company continues to face intense competition in the U.S. from Amazon.com and others. The recent record IPO of Alibaba and its entry into the U.S. with its 11 Main marketplace site could provide additional competition for eBay going forward.
PayPal announced that it has hired Dan Schulman, president of American Express's Enterprise Growth Group, as its new president, effective immediately. Mr. Schulman, who held senior executive roles at AT&T, Priceline and Virgin Mobile before joining Amex, will become the CEO of PayPal when it splits from eBay next year.
According to eBay, PayPal is involved in one of every six dollars spent online globally. PayPal accounts grew 15 percent year-over-year during the last quarter. It has used acquisitions of companies such as Braintree and One Touch to advance its position in the mobile payments industry, where it will face increased competition from Apple Pay, MCX's CurrentC and others.