31 March 2015

EBay rebuffs calls to spin-off PayPal

23 January 2014  |  2519 views  |  0 PayPal logo

EBay chief John Donahoe has rebuffed proposals from activist investor Carl Icahn that the company should spin-off PayPal to increase shareholder value.

The news of Icahn's interest came as Paypal published a strong set of fourth quarter results. Revenue increased 19% in both the quarter and the full year, resulting in $6.6 billion in 2013. PayPal gained 5.2 million active registered accounts in the quarter and ended the year with 143 million, a 16% increase.

In reporting the results, eBay announced that companies controlled by Icahn had acquired shares and derivative securities equating to an interest of 0.82% in the company. Icahn has nominated two of his employees to sit on eBay's board and called on the firm to split with PayPal.

In a conference call to investors, Donahoe said that much of PayPal's success is down to its intimate connection with the company's e-commerce platform. He also pointed to the great opportunities opening up to the firm through growth in mobile payments both on and off eBay.

"The distraction and disynergy of separation would be happening at exactly the wrong time," he told investors. "We're in this window of opportunity of commerce."

In a posting on the PayPal blog, the company says that spinning off PayPal as a separate company from eBay is not a new idea. "In fact, eBay's management team and board routinely explore all of the company's strategic options," states the post. "And based on everything the company and board see today, we continue to believe that shareholders and customers are best served by keeping PayPal and eBay together.

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