- Maximizes strategic focus and
flexibility for eBay and PayPal to capitalize on respective growth
opportunities in highly competitive, rapidly changing global
commerce and payments markets
- Preserves eBay and PayPal
relationships through arm’s length operating agreements
- Provides shareholders with more
targeted investment opportunities; best path to sustainable
shareholder value
Devin Wenig, president of eBay Marketplaces, to become CEO of
new eBay company following separation; American Express executive
Dan Schulman joins PayPal immediately as President and CEO designee
for PayPal post-separation; eBay Inc. President and CEO John
Donahoe and CFO Bob Swan to oversee separation and serve on boards
of new independent companies
eBay Inc. (Nasdaq:EBAY) today said its Board of Directors,
following a strategic review of the company’s growth strategies and
structure, has approved a plan to separate the company’s eBay and
PayPal businesses into independent publicly traded companies in
2015, subject to customary conditions. Creating two standalone
businesses best positions eBay and PayPal to capitalize on their
respective growth opportunities in the rapidly changing global
commerce and payments landscape, and is the best path for creating
sustainable shareholder value, the company said.
“eBay and PayPal are two great businesses with leading global
positions in commerce and payments,” said eBay Inc. President and
CEO John Donahoe. “For more than a decade eBay and PayPal have
mutually benefited from being part of one company, creating
substantial shareholder value. However, 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. The industry landscape is
changing, and each business faces different competitive
opportunities and challenges.
“eBay and PayPal will be sharper and stronger, and more focused
and competitive as leading, standalone companies in their
respective markets,” Donahoe continued. “As independent companies,
eBay and PayPal will enjoy added flexibility to pursue new market
and partnership opportunities. And we are confident following a
thorough assessment of the relationships between eBay and PayPal
that operating agreements can maintain synergies going forward. Our
board and management team believe that putting eBay and PayPal on
independent paths in 2015 is best for each business and will create
additional value for our shareholders.”
As the company has previously stated, eBay’s board of directors
has a practice of regularly reviewing the company’s growth
strategies and structure, and assessing all alternatives. As part
of such assessments, the board regularly explores the following
questions: Will separation make eBay and PayPal more competitive?
Will separation be possible without distracting innovation and
execution? And, will separation create sustainable value for
shareholders over time?
In its recently completed review, the board concluded:
- A changing competitive landscape
creates enormous opportunities for eBay and PayPal; separation will
create sharper strategic focus and better position each business to
capitalize on those growth opportunities as independent
companies. The pace of industry change and innovation in
commerce and payments requires maximum flexibility to stay
competitive and drive global leadership.
- The benefits of the existing
relationships between eBay and PayPal will naturally decline over
time and can be optimized in arm’s length operating agreements
between the two entities. Arm’s length operating agreements can
formalize the existing relationships between the two companies and
capture ongoing synergies.
- This is the best path for delivering
sustainable shareholder value. eBay is a leading global
commerce platform that has benefited from PayPal, and PayPal is a
strong, rapidly growing global payments leader because it has been
part of eBay. But beyond 2015, eBay and PayPal will each benefit
more and create greater value from the strategic focus, speed,
flexibility and agility that come with being independent publicly
traded companies.
The future
The company expects to complete the transaction as a tax-free
spin-off in the second half of 2015, subject to market, regulatory
and certain other conditions.
eBay Inc. President and CEO John Donahoe and company CFO Bob
Swan will be responsible for leading the separation of each
business, with board oversight. This includes determining
appropriate management and capital structures for eBay and PayPal,
and putting in place appropriate operating agreements. Neither
Donahoe nor Swan will have an executive management role in the new
eBay and PayPal companies. But to provide continuity, they each
expect to serve on one or both of the boards of the two
companies.
The “new” eBay
Devin Wenig, currently president of eBay Marketplaces, will
become CEO of the new eBay company. As CEO of eBay, Wenig will lead
the eBay Marketplaces and eBay Enterprise businesses. Revenue over
the last twelve months1 for these two businesses grew approximately
10% year-over-year to $9.9 billion, with eBay Marketplaces
accounting for about $8.7 billion. eBay Marketplaces and eBay
Enterprise collectively handled approximately $85 billion of gross
merchandise volume and gross merchandise sales, which grew 13
percent year over year. Scott Schenkel, currently the CFO of eBay
Marketplaces will become the CFO of the new eBay company.
A global commerce leader with 149 million active buyers, eBay is
one of the world’s top 30 global brands and a top 10 retail global
brand.2 Offering consumers worldwide extraordinary value and
selection, eBay has more than 700 million live listings at any
given time, and approximately 75% of sold items are new. eBay also
is a leader in emerging competitive battlegrounds such as mobile
and cross-border commerce. eBay has an installed mobile base of 200
million apps, generating $20 billion in mobile volume. Cross-border
commerce represents 20% of eBay’s gross merchandise volume and 61%
of Marketplaces revenue is international.
“eBay has been a leading innovator in the world of commerce for
almost 20 years; it’s an incredibly special business,” Donahoe
said. “Since joining eBay three years ago, Devin has proven to be
an exceptional global leader and operating executive. He is
steadily enhancing eBay’s unique assets and capabilities and
creating new commerce experiences to ensure long-term growth and
commerce leadership. He will make a fantastic CEO of eBay.”
The “new” PayPal
Concurrent with the announcement of the business separation
plan, the company also today announced the appointment of Dan
Schulman to be President of PayPal, effective immediately, and
CEO-designee of the standalone PayPal company following
separation.
Schulman joins PayPal from American Express, where he was
president of the company’s Enterprise Growth Group. A seasoned
leader in multiple industries, Schulman has held senior executive
and CEO roles at AT&T, Priceline and Virgin Mobile, prior to
joining American Express.
“As both a leading global technology platform and a financial
services business, PayPal requires a diverse blend of leadership
skills and operating experience in its president and future CEO,”
Donahoe said. “Dan has a proven track record of leading complex
technology businesses at scale, driving sustainable growth and
understanding how to innovate to drive competitive advantage and
deliver compelling experiences for customers. I am thrilled to have
him lead PayPal forward as a publicly traded, independent global
payments leader, and we welcome him to the team.”
PayPal is a rapidly growing global leader in digital payments
and the most trusted digital wallet, with more than 152 million
active registered accounts. Accounts grew 15% year-over-year last
quarter. Revenue over the last 12 months grew by 19% over the prior
year period to approximately $7.2 billion.
PayPal facilitates one in every six dollars spent online today.
Total payments volume over the last 12 months increased by 26% to
$203 billion, providing merchants and consumers worldwide a faster,
safer way to pay and be paid. PayPal is fully localized in 26
currencies, is available in 203 markets worldwide and has
relationships with 15,000 financial institutions. Representative of
its global reach, PayPal is the No. 1 payments processor for
business to consumer exports for Chinese merchants.
With acquisitions such as Braintree and its new One Touch mobile
payments experience, PayPal continues to lead and innovate in
mobile payments. One Touch is the industry’s first and only single
touch payments experience. PayPal processed $27 billion in mobile
payments volume in 2013. PayPal expects to process 1 billion mobile
transactions in 2014.
A strong record of delivering shareholder value
Since 2008, eBay Inc.’s board and management team have led a
successful turnaround of the company’s core eBay Marketplace
business; have dramatically grown PayPal and drove digital payments
innovation; and through 37 acquisitions have built a strong
portfolio of global commerce and payments technologies, assets and
capabilities.
The company’s board and management team have a clear track
record of making the right decisions for eBay and its
shareholders.
“Together, eBay and PayPal have delivered substantial value
creation for our shareholders,” Donahoe said. “We believe eBay and
PayPal will continue to do so as separate, independent companies.
Tremendous opportunities exist for each business.”
Goldman, Sachs & Co. and Allen & Company LLC are serving
as financial advisors and Wachtell, Lipton, Rosen and Katz is
serving as legal counsel to eBay Inc.
1 Last four public quarters
2 Interbrand
Conference Call and Webcast
eBay Inc. will host a conference call to discuss the separation
of eBay and PayPal at 8:00 am ET. A live webcast of the conference
call, together with a slide presentation can be accessed through
the company's Investor Relations website at
http://investor.ebayinc.com. In addition, an archive of the webcast
will be accessible for 90 days through the same link.
eBay Inc. uses its Investor Relations website at
http://investor.ebayinc.com as a means of disclosing material
non-public information and for complying with its disclosure
obligations under Regulation FD. Accordingly, investors should
monitor, in addition to following press releases, SEC filings,
public conference calls and webcasts.
For more information on this announcement, please visit
http://update.ebayinc.com
About eBay Inc.
eBay Inc. (NASDAQ:EBAY) is a global commerce and payments
leader, providing a robust platform where merchants of all sizes
can compete and win. Founded in 1995 in San Jose, Calif., eBay Inc.
connects millions of buyers and sellers and enabled $205 billion*
of commerce volume in 2013. We do so through eBay, one of the
world's largest online marketplaces, which allows users to buy and
sell in nearly every country on earth; through PayPal, which
enables individuals and businesses to securely, easily and quickly
send and receive digital payments; and through eBay Enterprise,
which enables omnichannel commerce, multichannel retailing and
digital marketing for global enterprises in the U.S. and
internationally. We also reach millions through specialized
marketplaces such as StubHub, the world's largest ticket
marketplace, and eBay classifieds sites, which together have a
presence in more than 1,000 cities around the world. For more
information about the company and its global portfolio of online
brands, visit www.ebayinc.com.
* This adjusted number reflects decision to remove vehicles and
real estate GMV from ongoing total GMV and ECV metrics (previously
stated ECV for 2013 was $212 billion, incorporating vehicles and
real estate GMV).
Forward-Looking Statements
This press release contains forward-looking statements relating
to, among other things, the planned separation of eBay Inc.’s
Marketplaces and PayPal businesses and the future performance of
eBay Inc. and its consolidated subsidiaries that are based on the
company's current expectations, forecasts and assumptions and
involve risks and uncertainties. These statements include, but are
not limited to, the completion and timing of any such separation,
the future performance of the Marketplaces and PayPal businesses on
a standalone business if the separation is completed, and the
future growth of mobile payments and mobile commerce. Actual
results could differ materially from those predicted or implied and
reported results should not be considered as an indication of
future performance. There is no assurance as to the timing of the
spin-off or whether it will be completed. Other factors that could
cause or contribute to such differences include, but are not
limited to: whether the operational, marketing and strategic
benefits of the separation can be achieved; whether the costs and
expenses of the separation can be controlled within expectations;
changes in political, business and economic conditions, any
European, Asian or general economic downturn or crisis (including
any economic disruption or sanctions related to Ukraine or Russia)
and any conditions that affect ecommerce growth; fluctuations in
foreign currency exchange rates; our need to successfully react to
the increasing importance of mobile payments and mobile commerce
and the increasing social aspect of commerce; our ability to deal
with the increasingly competitive ecommerce environment, including
competition for sellers from other trading sites and other means of
selling, and competition for buyers from other merchants, online
and offline; changes to capital allocation or management of
operating cash; our need to manage an increasingly large enterprise
with a broad range of businesses of varying degrees of maturity and
in many different geographies; the effect of management changes and
business initiatives; our need and ability to manage other
regulatory, tax and litigation risks as services are offered in
more jurisdictions and applicable laws become more restrictive; any
changes to product offerings; the competitive, regulatory, payment
card association-related and other risks specific to PayPal and
Bill Me Later, especially as PayPal continues to expand
geographically and introduce new products and as new laws and
regulations related to financial services companies come into
effect; our ability to timely upgrade and develop technology
systems, infrastructure and customer service capabilities at
reasonable cost; our ability to maintain site stability and
performance on all sites while adding new products and features in
a timely fashion; and our ability to profitably integrate, manage
and grow businesses that have been acquired or may be acquired in
the future. The forward-looking statements in this communication do
not include the potential impact of any acquisitions or
divestitures that may be announced and/or completed after the date
hereof.
More information about factors that could affect our operating
results is included under the captions “Risk Factors” and
“Management's Discussion and Analysis of Financial Condition and
Results of Operations” in eBay Inc.’s most recent annual report on
Form 10-K and subsequent quarterly reports on Form 10-Q, copies of
which may be obtained by visiting the eBay Inc. Investor Relations
website at http://investor.ebayinc.com or the SEC’s website at
www.sec.gov. All information in this communication is as of the
date hereof. Undue reliance should not be placed on the
forward-looking statements in this communication, which are based
on information available to eBay Inc. on the date hereof. eBay Inc.
assumes no obligation to update such statements, except as required
by law.
eBay Inc.Amanda Coffee, 408-221-1984press@ebay.com
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