eBay To Spin Off PayPal

In 2002, eBay bought PayPal for $1.5 billion in stock. Nowadays, PayPal’s yearly revenues exceed $7 billion, and investors are worried that eBay and PayPal together are too big to compete effectively. (They’re also too big to be acquired, which is on their minds after the ludicrously successful Alibaba IPO.) To solve that problem, eBay today announced it will be spinning off PayPal in 2015, creating two separate publicly traded companies. eBay’s current CEO is stepping down, and each of the companies will have a new CEO. “As part of the separation, eBay and PayPal will sign arm’s length commercial operating agreements to work together, with payments on both sides for various referrals and services. That’s no surprise since about 30 percent of PayPal’s business is still on eBay, although that is down from 50 percent only a few years ago.”

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