eBay has announced it plans to split its PayPal unit into a separately traded company in the second half of 2015. The two companies joined forces in 2002 as way for eBay to boost PayPal transactions by driving customers to the payment system. In a statement, eBay CEO John Donahue says,
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… The industry landscape is changing, and each business faces different competitive opportunities and challenges.”
Other reasons cited for the split include the decreasing link between eBay and PayPal. eBay accounts for less that one-third of PayPal’s total payments, which was projected by Donahue to further fall to 15 percent .
Analysts suggest this split makes sense as it will allow the separate companies to focus on their respective competition. CNET reports eBay shares rose 8.2 percent in premarket trading on Tuesday.
The online auctioneer has grown into a large marketplace since its first started. In the last 12 months, the company reports that its Marketplace generated $8.7 BN in revenue of the total $9.9 BN for eBay as a whole. However, despite these successes, the company is increasingly up against Amazon.
While some speculate the separation is in preparation to position the companies for sale, Donue dismisses the notion, stating both companies maintain “strong footprints and organic qualities moving forward.”
Read more here-“ eBay, PayPal to Split into Separate Companies in 2015,” (Roger Cheng, CNET)
Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.