EBay has announced a plan to split its PayPal business into a separate, publicly traded company in 2015.
The move has been advocated for some time by minority shareholder Carl Icahn, though his January 2014 proposal for the spinoff failed in April. Icahn, known for his willingness to make big bets on companies and publicly push for new strategies, had argued that making PayPal a public company would raise needed capital and help it compete in the increasingly crowded digital payments industry.
After the two companies are separated into two entities, Devin Wenig, currently the president of eBay Marketplaces, will become the CEO of eBay. Dan Schulman, previously the President of American Express’ Enterprise Growth Group, is joining the company to become president of PayPal; following the spinoff, he will become the CEO of PayPal.
“For more than a decade, eBay and PayPal have mutually benefited from being part of one company, creating substantial shareholder value," current eBay president and CEO John Donahoe in a statement. "However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively."
“EBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets,” he added.
The news sent eBay shares sharply higher in pre-market trading, up 8.6%.
The move is a dramatic turn just six months after Donahoe publicly fought against calls for a split, saying "a full separation of PayPal is not a good idea." He is not slated to have a management role in either company after the spinoff.
Donahoe has been credited by some for helping eBay rebound from a difficult stretch the began around 2005. Since taking over the CEO position from Meg Whitman in 2008, Donahoe has overseen an almost 75% rise in eBay's stock price.
PayPal's revenue has narrowed the gap on eBay in the past few years, thanks to stronger growth.
