In a move that CEO John Donahoe and several board members have resisted for months, eBay will spin off its PayPal unit, the company said Tuesday.
Activist investor Carl Icahn has been agitating for a PayPal spinoff from eBay since January, saying PayPal and its investors would benefit from the payments company going solo.
The separation is expected to be complete in the second half of next year, when Daniel H. Schulman will become CEO of PayPal. Schulman, most recently group president of enterprise growth at American Express, has joined PayPal as president, the company also announced on Tuesday. Devin Wenig, eBay president since 2011, will become CEO, and Donahoe will step down from his role.
It sure looks like eBay is caving to activist investor Carl Icahn’s longstanding demand to rend PayPal and eBay asunder. But Donahoe says the company came to the same conclusion through a highly deliberative process and that a new payments environment ushered in by Apple Pay and other mobile developments was a factor in the decision.
EBay’s 2002 acquisition of PayPal created synergies that apparently have now broken down, at least for PayPal. Without eBay holding PayPal back—as many observers have argued it has been in recent months—PayPal can more easily flex its muscles in the burgeoning mobile payments sector.