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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
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Preserves eBay and PayPal relationships through arm's length
operating agreements
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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
SAN JOSE, Calif.--(BUSINESS WIRE)--
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:
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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.
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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.
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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://investors.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://investors.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://investors.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, 408-221-1984
press@ebay.com
Source: eBay Inc.
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