eBay shares edge higher on PayPal spin-off

PayPal will be spun off as a separate company in the second half of next year

(AFP PHOTO/Karen BLEIER)

Shares in eBay soared after the ecommerce giant announced it is splitting in two.

The company’s payments system PayPal, which eBay spent $1.5 billion (£924 million) on buying in 2012, will be spun off as a separate company in the second half of next year.

The move comes after activist investor Carl Icahn waged a campaign this year for PayPal to be sold off, although he ended up dropping his call in April after saying he believed major shareholders would not back it.

News of the split prompted shares in eBay to jump nearly 10 per cent on Wall Street in pre-market trading today, rising $5.25 to $57.91.

eBay said that following a “thorough strategic review”, keeping the two units together “beyond 2015 clearly becomes less advantageous to each business strategically and competitively”.

Ebay’s chief executive and president John Donahoe and chief financial officer Bob Swan will lead the separation, but will not hold executive roles after it is finished.

American Express Dan Schulman was today named as president of PayPal and will become chief executive of the business once it is independent. The new eBay company will be headed by Devin Wenig, the boss of its main Marketplaces business.

Revenues at PayPal jumped 19 per cent over the past year to around $7.2 billion.