In an unsurprising move, despite best efforts to keep the companies joined, eBay announced it will split its PayPal unit into a separately traded company in 2015.
The separation will bring in two new leaders. Devin Wenig, eBay Marketplaces president,
will become the new CEO of eBay. Dan Schulman, president of the American Express Enterprise Growth Group, will serve as the new CEO of PayPal.
Current eBay CEO John Donahoe and CFO Bob Swan will help with the transition, but will no longer serve as executives at either of the companies. The split is expected to happen in the H2 2015.
The move marks the end of what has been seen as an awkward partnership since eBay acquired PayPal for $1.5 billion in 2002. The deal was initially pitched as a way for eBay to boost PayPal transactions by driving its auction participants toward the online payment service. But eBay couldn’t realize any significant merger benefits beyond pushing traffic.
“A thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively,” Donahoe said in a statement. “The industry landscape is changing, and each business faces different competitive opportunities and challenges.”
The two businesses have increasingly moved in separate directions. eBay has grown from a simple auction house for used goods to a full-fledged marketplace. eBay has 149 million active buyers on the site, and its Marketplaces unit generated $8.7 billion in revenue over the last 12 months, out of $9.9 billion in revenue for eBay as a whole. eBay has been building up its Enterprise business, which manages the online retail presence of other brands. The company said eBay handled roughly $85 billion in gross merchandise volume, which represents 13% growth year over year.
PayPal, meanwhile, has grown from an online payments business to one that aspires to become your mobile wallet. The business has tinkered with ways for people to use PayPal for real-life transactions in addition to transferring funds online or through its mobile app. The company, over the last three years, has increased its focus on building a larger presence on smartphones through mobile payments. In 2013, PayPal processed $27 billion in mobile payments out of a total of $203 billion.
eBay said PayPal has more than 152 million active registered accounts, with revenue over the last 12 months at $7.2 billion. That represents a growth rate of 19% over the previous year. PayPal handles one in every six dollars spent online today.