Paypal and eBay to Split in 2015
Lately it seems we’ve heard a lot about mergers and acquisitions: Apple buying Beats, Samsung buying SmartThings, Microsoft buying Nokia (and Mojang), among plenty of others. What we don’t hear so often is the opposite, but that’s the big news today: after 12 years together, eBay and PayPal are splitting into two separate companies in the second half of 2015.
News broke of the division this morning, in which the companies explained (via press release) that they’ll be able to better grow apart than they can together:
“Creating two standalone businesses best positions eBay and PayPal to capitalize 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.”
John Donahoe, President and CEO of eBay, had this to say on the news:
“eBay and PayPal will be sharper and stronger, and more focused and competitive as leading, standalone companies in their respective markets. As independent companies, eBay and PayPal will enjoy added flexibility to pursue new market and partnership opportunities. And we are confident following a thorough assessment of the relationships between eBay and PayPal that operating agreements can maintain synergies going forward. Our 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 our shareholders.”
At the end of the day, this makes a certain amount of sense. Without question, PayPal is facing greater competition in the world of electronic payments. Once, they were the only place to go for fast and easy payments via the Internet. Today, they’re one of a world of options, not least of which being the recently announced Apple Pay feature, or Amazon Local Register.
The same could be said for eBay in terms of buying goods online – and, in fact, you could even say that eBay has lost far more relevance over the past 12 years than PayPal has.
Splitting up will allow both companies to figure out how to compete in today’s economic landscape, and to do so without being hampered by the needs of the other. When the split happens, Donahoe will no longer serve as CEO – that job will go to current eBay Marketplaces president Devin Wenig. Meanwhile, Dan Schulman, president of the American Express Enterprise Growth Group, will become PayPal’s new CEO.
The two companies will likely still have a close relationship considering how accustomed eBay users have gotten to buying stuff with PayPal. The good news here, though, is that now eBay will be able to broaden its payment horizons and offer even more options to consumers.