Online auction site eBay and payments system PayPal are set to split into two separate companies according to reports today.
The separation is due to be completed in the second half of next year.
“A thorough strategic review..shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively,” said John Donahoe, eBay’s chief executive.
PayPal’s revenue is growing twice as quickly as eBay’s annually (at almost 19% a year). The payments system is expected to process a massive one billion payments in this year alone.
“The industry landscape is changing, and each business faces different competitive opportunities and challenges,” Mr. Donahoe continued.
He also acknowledged that eBay was following the strategy recommended by Mr. Ichan earlier this year. Mr. Ichan had demanded a spinoff as a way to generate value for shareholders.
EBay bought PayPal in 2002 for $1.5 billion and is now the firm’s fastest growing business.
