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eBay split to create independent PayPal

US online auction giant eBay announced plans Tuesday to spin off PayPal, a move designed to help the unit compete better in the fast-moving online payments segment. The plan, to take effect next year, comes after months of pressure from activist investor Carl Icahn, who had assailed eBay for poor management and claimed that keeping eBay tied with PayPal depressed the value of both units.

An eBay statement said that a board review concluded that "a changing competitive landscape creates enormous opportunities for eBay and PayPal" and that "separation will create sharper strategic focus" for each unit. Company president and chief executive John Donahoe said that "for more than a decade, eBay and PayPal have mutually benefited from being part of one company," but that the situation had now changed.

"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. PayPal accounted for 41 percent of eBay's revenues last year and has more than 152 million active users. eBay acquired PayPal in 2002 for roughly $1.5 billion in shares, integrating the payment service that had already been widely used for online auctions.

Copyright Agence France-Presse, 2014



 



 
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