EBay's board of directors has approved a plan to separate the company's eBay and PayPal businesses into independent publicly traded companies next year.
Creating two stand-alone businesses best positions eBay and PayPal to capitalize on their respective growth opportunities in the rapidly changing global commerce and payments landscape, eBay said in a statement Tuesday.
The split is expected to be completed as a tax-free spinoff in the second half of next year, with American Express executive Dan Schulman as CEO of PayPal. Meanwhile, Schulman will serve as president of PayPal. He had been president of the American Express Enterprise Growth Group.
Devin Wenig, president of eBay Marketplaces, will be CEO of eBay after the separation. EBay President and CEO John Donahoe and CFO Bob Swan will oversee the separation of the companies and then are each expected to serve on one or both boards of directors when the split is complete.
The move comes months after investor Carl Icahn ripped into the eBay board of directors in February, calling for the company to spin off its PayPal unit. Back then, eBay's leadership gave the idea the cold shoulder, saying that PayPal and eBay were better together.
But the board also said that should circumstances change it would evaluate alternatives, which has now been done."
Keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively. The industry landscape is changing, and each business faces different competitive opportunities and challenges," according to the statement.
For PayPal, continued growth in the mobile payments space, both online and in stores, is key for its success. The split will give PayPal the "maximum flexibility" it needs to stay competitive, particularly in light of the launch of Apple Pay.
Schulman was hand-picked with the mobile sector in mind. Prior to joining American Express, he served as president of the Prepaid Group at Sprint Nextel following its acquisition of Virgin Mobile USA in 2009, where he led the company as its founding CEO.
PayPal stepped up its mobile push with the recent launch of One Touch. The product is a result of last year's acquisition of Braintree and aims to make it easier for users to shop and pay using mobile phones.
PayPal processed US$27 billion in mobile payments volume in 2013 and expects to process 1 billion mobile transactions this year, eBay said.