The Bay Inc board of directors have approved plans to separate the company’s eBay and PayPal businesses into independent publicly traded companies in the second half of 2015.
“Creating two standalone businesses best positions eBay and PayPal to capitalise on their respective growth opportunities in the rapidly changing global commerce and payments landscape, and is the best path for creating sustainable shareholder value,” the company said in a press statement.
eBay Inc. President and CEO John Donahoe added that for more than a decade, eBay and PayPal have mutually benefited from being part of one company, creating substantial shareholder value. However, a thorough strategic review showed that keeping eBay and PayPal together beyond 2015 clearly will become “less advantageous to each business strategically and competitively”.
“The industry landscape is changing, and each business faces different competitive opportunities and challenges. As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities,” Donahoe added.
eBay Inc. president and CEO John Donahoe and company CFO Bob Swan will be responsible for leading the separation of each business, with board oversight. This includes determining appropriate management and capital structures for eBay and PayPal, and putting in place appropriate operating agreements. However, neither Donahoe nor Swan will have an executive management role in the new eBay and PayPal companies.
Devin Wenig, currently president of eBay Marketplaces, will become CEO of the new eBay company. As CEO of eBay, Wenig will lead the eBay Marketplaces and eBay Enterprise businesses. Scott Schenkel, currently the CFO of eBay Marketplaces will become the CFO of the new eBay company.
“Since joining eBay three years ago, Devin has proven to be an exceptional global leader and operating executive. He is steadily enhancing eBay’s unique assets and capabilities and creating new commerce experiences to ensure long-term growth and commerce leadership. He will make a fantastic CEO of eBay,” Donahoe said.
PayPal has also appointed Dan Schulman as president of PayPal, effective immediately, and CEO-designee of the standalone PayPal company following separation. Schulman joins PayPal from American Express, where he was president of the company’s Enterprise Growth Group. Schulman has held senior executive and CEO roles at AT&T, Priceline and Virgin Mobile, prior to joining American Express.
“As both a leading global technology platform and a financial services business, PayPal requires a diverse blend of leadership skills and operating experience in its president and future CEO,” Donahoe added.
“Schulman has a proven track record of leading complex technology businesses at scale, driving sustainable growth and understanding how to innovate to drive competitive advantage and deliver compelling experiences for customers.”
PayPal currently has more than 152 million active registered accounts. According to the company, accounts grew 15% year-over-year last quarter. Revenue over the last 12 months grew by 19% over the prior year period to approximately US$7.2 billion. PayPal facilitates one in every six dollars spent online today. PayPal is fully localised in 26 currencies, is available in 203 markets worldwide and has relationships with 15,000 financial institutions.