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Score one for activist investor Carl Icahn: eBay is divesting itself of PayPal, its online payment entity after 12 years together. The separation, in which PayPal will become an independent publicly-traded company, should be completed next year, according to a statement that said the eBay board approved the move following a strategic review of the companies’ options. eBay bought PayPal for $1.5 billion in 2002.
Icahn started motivating for a breakup last year and settled with eBay on the issue in April of this year when eBay added David Dorman, of CenterView Capital Technology, an Icahn pick, to its board. At about that time, [company]eBay[/company] CEO John Donahoe reiterated that the two companies were better together.
As for the logistics, Devin Wenig, president of eBay Marketplaces, will become CEO of the new eBay post separation. Dan Schulman, of American Express, joins [company]PayPal[/company] as of now as president and designated CEO of the new PayPal. All of this will be overseen by Donahoe and eBay CFO Bob Swan. Post break up, these two execs will both have seats on the boards of the two companies.
The decision to go ahead came after a “strategic review” by the board that showed keeping the companies together going forward was becoming “less advantageous to each business strategically and competitively. The industry landscape is changing, and each business faces different competitive opportunities and challenges.”
A divorce will give both companies “added flexibility to pursue new market and partnership opportunities,” according to the statement.
Activist investors are rearing their heads on a couple of tech fronts. [company]Elliott Management[/company] is apparently working behind the scenes for a potential break up of the EMC-VMware federation, for example.