Business

Is eBay getting ready to split off PayPal? eBay says nothing has changed

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eBay continues to say nothing has changed as it “assesses all alternatives” about what to do with PayPal.

The company sent a statement to VentureBeat today in response to our inquiry about a report in The Information that a split is being seriously considered:

The eBay Inc board and management team remain focused on maximizing shareholder value. As we discussed during proxy season and in our Q2 financial results call, the board will continue to assess all alternatives to create that long term value and to enhance the growth and competitive positions of both eBay and PayPal. This position has not changed.

Citing “two people briefed on the conversations,” The Information said potential replacements for the position of former PayPal head David Marcus are being told that eBay may spin off PayPal as early as next year.

The story describes the position being filled as PayPal CEO, but one expects it is actually for PayPal President, which was Marcus’ title until he left last month to join Facebook.

If accurate, this is in contrast to the continuing non-commitment by the company to take such an action, which has become a major campaign by activist investor Carl Icahn.

Discussion of a split with PayPal candidates “has some plausibility, but it doesn’t make much sense,” IDC research director James Wester told VentureBeat.

“Right now, 24 percent of PayPal’s payment volume is coming through eBay,” he said. “That’s a pretty considerable amount.”

While PayPal might still be able to contractually get this level of volume if it were split off, Wester said such a separation could be “disruptive” when it is already “tightly linked [with a company] in an important relationship.”

In the other direction, PayPal contributes about 45 percent to eBay’s total revenue.

Some eBay-watchers have agreed in essence with Icahn, that PayPal could get a high valuation as a separate company, could pursue more partnerships, could develop “a startup mentality,” and/or could even become the world’s largest bank.

“If PayPal had been lax on releasing products,” Wester told us, or otherwise clearly not actively growing their role, such a split might make sense. But, he noted, PayPay bought payments gateway BrainTree late last year, and has been “releasing lots of interesting [products].”

“It doesn’t seem like they’re being held back by eBay,” he said.

More information:

eBay Inc. connects millions of buyers and sellers globally on a daily basis through eBay, the world's largest online marketplace, and PayPal, which enables individuals and businesses to securely, easily and quickly send and receive onl... read more »

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1 comments
Dagmar Schnietz
Dagmar Schnietz

I don't see this split happening. PayPal and Ebay are like...like...no I don't see this happening at all.