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PayPal and eBay become separate entities from 2015

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eBay announced yesterday that it plans to cease trading eBay and PayPal, the online auction site's electronic payment system, as separate entities, and will be operating them as independent publicly traded companies. The surprise move follows Apple's unveiling of their own mobile payment system called “Apple Pay,” which looks set to be a fierce rival to PayPal. The split is due to take place next year (pending approval), and will provide the company's shareholders with more targeted investment opportunities. Devin Wenig, who is currently the president of eBay Marketplaces, will be promoted to CEO of the 'new' eBay, whilst former American Express executive Dan Schulman will join PayPal as president and CEO. Schulman was also the founding CEO of Virgin Mobile and was CEO of the discount travel site, Priceline.com.

The split is due to take place next year (pending approval), and will provide the company's shareholders with more targeted investment opportunities

The split is perhaps more surprising, because a split has already been rumoured and rejected once this year, back in January when billionaire hedge fund investor Carl Icahn called for a split. Icahn said at the time; “PayPal’s a jewel and eBay is covering up its value.” Current eBay president and CEO John Donahoe, of course, was quick to disagree, countering that “eBay has accelerated and enhanced PayPal’s success, allowing it to be more aggressive, bolder and to take more risk than if it was separate.” Now, it would appear that Donahoe, who will be responsible for leading the split with CFO Bob Swan, has significantly changed his tune. Yesterday he said that “eBay and PayPal are two great businesses with leading global positions in commerce and payments.”

Carl Icahn calls the split a “No-brainer”

Donahoe adds that whilst eBay and PayPal have “Mutually benefited from being part of one company, creating substantial shareholder value for more than a decade,” he now feels they will be "Sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets.” He also believes that “As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities,” and says the eBay board and management team “Believe that putting eBay and PayPal on independent paths in 2015 is best for each business,” and will create additional value for their shareholders. He concludes by stating that he believes “eBay and PayPal will continue to deliver substantial value creation for shareholders as separate, independent companies,” and that “Tremendous opportunities exist for each business” going forward in 2015.

As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities.” John Donahoe

In other recent eBay news, it was also announced yesterday that Jean-Baptiste Goux has been promoted to head of programmatic advertising, replacing Guy Jones, who left eBay for a role at Immediate Media. Goux will be working with direct sales agency Ad2One to oversee growth in eBay Advertising's programmatic platform, which has doubled in popularity over the past year. Phuong Nguyen, eBay UK's director of advertising, believes programmatic will be central to the company's global growth strategy going forward, and is “Working to educate the industry that programmatic is about much more than remnant inventory.” He adds that eBay's “Advertising Private Marketplace gives advertisers access to premium inventory and sophisticated targeting to eBay’s 19 million purchase-ready shoppers in the UK,” and says that this will continue to be their focus into next year and beyond.

Official eBay Website

Benjamin Hiorns is a freelance writer and musician from Kidderminster in the UK. He's also a seasoned eBay and PayPal user.

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