EBay Inc said it would spin off PayPal, its fast-growing payments business, into a publicly traded company in the second half of 2015, marking an about-face for the company.
EBay Chief Executive John Donahoe had resisted demands by activist investor Carl Icahn to hive off the service, saying PayPal was integral to eBay’s business – and vice versa. Icahn backed off from his demand in April.
“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,” Donahoe said in a statement on Tuesday.
After the tax-free spinoff to shareholders, the new eBay will be headed by Devin Wenig, president of eBay Marketplaces and former head of the Markets division of Thomson Reuters Corp.
American Express Co executive Dan Schulman joins PayPal immediately as president and CEO of PayPal after the spinoff, the company said.
Donahoe and Chief Financial Officer Bob Swan will oversee the separation and serve on the boards of both companies.
PayPal was founded in the late 1990s and went public in 2002. It was acquired by eBay soon afterward for $1.5 billion.
PayPal had 143 million active users at the end of 2013, up 16 percent from a year earlier.