Business

EBay to spin off PayPal; Icahn makes $123M on the move

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Social Links for Kaja Whitehouse
Published Sep. 30, 2014, 9:46 a.m. ET

You were right all along, Carl!

EBay announced on Tuesday that it will spin off its PayPal arm, taking the advice of corporate cage-rattler Carl Icahn months after fighting him on the idea — but only weeks after coming face to face with Apple Pay, Apple’s new e-wallet.

The company’s board of directors said it would separate eBay and PayPal into two publicly traded companies in 2015, which sent the stock up 7.5 percent, to close at $56.63 on Tuesday.

Icahn, who owns 30.8 million eBay shares, saw his 2.5-percent stake grow by an impressive $123 million on the move.

The 78-year-old Far Rockaway, Queens, native wasted no time gloating over his win.

“As I have said in the past and have continued to maintain, it is almost a ‘no brainer’ that these companies should be separated,” Icahn said on his Web site, Shareholderssquaretable.com. “We are happy that eBay’s board and management have acted responsibly concerning the separation — perhaps a little later than they should have, but earlier than we expected,” he said.

CEO John Donahoe will lead the separation together with CFO Bob Swan, but neither will have an “executive management role” in the new companies after they are separated, eBay said.

The two men will, however, remain on the boards of one or both of the new companies, according to the company.

The new eBay will be headed by Devin Wenig, president of the eBay marketplaces unit, while PayPal’s chief executive will be Dan Schulman, the former head of American Express’s mobile payment business.

In January, Donahoe publicly blasted Icahn’s proposal to spin off PayPal, saying the two were better off together.

“No other payments competitor has achieved PayPal’s success — because no other competitor has a commerce platform like eBay,” he said in the midst of his war of words with Icahn.

“In fact, today we see more and more commerce and payments competitors trying to replicate the eBay and PayPal model,” Donahoe added.

Icahn backed down from the fight in April as it became clear he was not going to win his effort to get two nominees elected to eBay’s board. The company did, however, appoint a new independent director, who was OK’ed by Icahn, as a concession.