Today eBay released SEC filings revealing what sort of agreements it and PayPal will be held to post split.
Ebay first announced last fall that it would spin off subsidiary PayPal to form two publicly traded companies. Now the company has released detailed plans for the separation, including an operating agreement.
Here are six key takeaways from the filing:
1) PayPal will be required to offer eBay merchants service at the same low rates it offers other non-eBay merchants, specifically those who pay within the lowest 20th percent of possible rates.
2) PayPal will pay eBay an ongoing fee for business eBay generated for PayPal by recommending its service to merchants over the years.
3) PayPal and eBay have agreed to pay one another in the event that use of PayPal’s services on eBay either surges or declines. So if eBay is able to drive use of PayPal on its platform, PayPal will pay eBay a fee. If usage of PayPal on eBay drops more than 5 percent below an agreed-upon baseline, eBay agrees to pay PayPal a fee. Fees will be paid annually.
4) eBay and PayPal cannot directly compete.
5) PayPal and eBay will be able to develop products together if they so choose. They will also be able to enter into data sharing agreements. This includes security and fraud-related information sharing.
6) This agreement will expire in 5 years with an opportunity for renewal.