eBay's move to split itself into two companies and spin off PayPal marks a big win for activist shareholder Carl Icahn. Fred Katayama reports.
eBay pulls a 180. The online auction site is spinning off PayPal after all. eBay will split into two publicly traded companies, its fast-growing payment processing unit, PayPal, and the new eBay containing its Marketplaces businesses. eBay has recruited American Express executive Dan Schulman to head PayPal. Marketplaces head Devin Wenig, a former Thomson Reuters executive, becomes CEO of the new eBay. The split is a huge win for Carl Icahn. The activist shareholder had pressured eBay to split the company to unlock shareholder value. But he backed off in April. PayPal has been growing much faster than the traditional Marketplaces business and now accounts for more than 40 percent of revenue. The move also comes after Apple launched its mobile payment service, Apple Pay, and eBay's Chinese e-commerce rival Alibaba went public in the biggest IPO ever. The split could make the new eBay a takeout target. Piper Jaffray analyst Gene Munster said, "It could make Marketplace more attractive as an acquisition, which is something that investors have been thinking about since Alibaba's IPO." The split takes effect the second half of next year, but it appears shareholders are winners for now. eBay shares, which are down 4 percent this year, soared in early trading. As Apple Pay takes on PayPal, Icahn wins either way. He's also got a stake in Apple.