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eBay (NASDAQ: EBAY) and PayPal part ways and Icahn wins

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By on Street Watch

eBay (NASDAQ:EBAY) is an online global market place where buyers and sellers come on one platform to trade goods of almost all kinds. PayPal is an international e-commerce business that enables buyers and sellers to make and receive payments online in a safe and hassle free manner. These two companies have been working together in collaboration for quite a while. However, Carl Icahn, an activist investor started a movement about 9 months ago where he introduced the idea of splitting eBay Inc. (NASDAQ:EBAY) and PayPal. His idea was to discontinue the PayPal payments part of the company and he argued that this will benefit PayPal in the long run. He proposed the idea to the CEO of eBay (NASDAQ:EBAY) John Donahue, who was skeptical at first but agreed to it on Tuesday along with the eBay (NASDAQ:EBAY) board.

PayPal is expected to be dropped off by eBay Inc (NASDAQ:EBAY) by the middle of next year if everything goes as planned. The details of the split are not known as yet, however; what has been declared so far is that Donahoe will no longer be the CEO of either eBay (NASDAQ:EBAY) or PayPal. After the split eBay Inc. (NASDAQ:EBAY) is expected to be run by Devin Wenig who is the current president of eBay market places. Dan Schulman is expected to get the post of PayPal’s chief executive. Schulman is currently presides over the growth group of American Express co. (NYSE:AXP).

According to a press release on Tuesday, Bob Swan, the current CFO of eBay (NASDAQ:EBAY) along with Donahoe will supervise the separation of the two companies but neither will play any executive role in the two company’s future ventures. However, in order to maintain stability, both gentlemen are expected to serve on the company’s board.

Donahue was against the two companies parting ways and in April he tried to persuade Icahn to drop the idea and become a board member instead, but Icahn has always been firm on his idea. Icahn is the owner of about 31 million eBay (NASDAQ:EBAY) shares as per August SEC filing and said that, he and Donhoe are both very positive about the potential of eBay (NASDAQ:EBAY) and PayPal.  He also said that he is confident that eBay (NASDAQ:EBAY) will benefit a great deal by parting ways with PayPal and it is due to this reason that he is firmly pressing for the case of splitting the two companies. Icahn went on to say that although Donahue has not yet made any commitments in this matter, the two have decided to meet on regular basis to discuss this matter. He said that whenever Donahoe is in New York, the two will meet up to discuss strategies and ideas for the split.

After looking at the whole matter closely it seems that Icahn has won the case and the two companies are headed towards a separation sooner or later. Whether this split will actually be beneficial for eBay (NASDAQ:EBAY) and PayPal like Icahn predicts is yet to be seen.

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