EBay's Breakup Plans May Open Door for Ecommerce Deals

Splitting into three different companies could accommodate would-be suitors, signaling a potential merger fight after the breakup.

By Reuters

This story originally appeared on Reuters

EBay Inc's plans to break up into three different companies could accommodate would-be suitors, signaling a potential merger fight after the breakup.

The company plans to spin off its payments division, PayPal, from its core marketplace division in the second half of the year, making two standalone publicly traded companies that some analysts say could be worth more than the combined entity.

On Wednesday, eBay added that it will sell or prepare a public offering of its eBay Enterprise unit, which the company bought for $2.4 billion roughly four years ago.

The announced moves are intended to give each business the ability to consider all their alternatives, including a sale, eBay Chief Executive Officer John Donahoe said.

"No one knows what's going happen down the road," Donahoe said in an interview on Wednesday, after eBay reported fourth-quarter earnings. "But each business will have the flexibility they need to do what they need to do to win."

The moves come as Wall Street analysts question how long eBay and PayPal can withstand growing competition from online rivals such as Amazon.com Inc, Google Inc and Alibaba Group Holding Ltd, as well as retailers such as Wal-Mart Stores Inc which are investing in their own e-commerce and payments platforms.

As part of the moves announced on Wednesday, eBay agreed to adopt a number of corporate governance changes championed by activist investor Carl Icahn that would limit PayPal board's ability to prevent a takeover once it splits from eBay.

Any investor who owns 20 percent of PayPal will be able to call special meetings of shareholders, Icahn said in a separate statement that coincided with eBay's release. EBay also outlined plans to cut 7 percent of its workforce, or 2,400 positions, in the current quarter.

"I don't think that is the primary goal, but in general these moves could make for a cleaner, or more attractive, merger or acquisition," said Baird analyst Colin Sebastian, who has previously said Google could be a suitor for eBay.

The eBay Marketplaces unit is now going after so-called "avid" shoppers hungry for a bargain. Its enterprise division, which advises companies on how to grow online, will strengthen its relationships with top retailers and brands.

Potential buyers of eBay Enterprise include companies focused on building ties with other businesses, such as Salesforce.com Inc, IBM Corp, Demandware Inc, Adobe Systems Inc or startup Bigcommerce, some experts said.

Salesforce declined to comment, while the other companies were not immediately available for comment.

(Reporting by Deepa Seetharaman; Editing by Lisa Shumaker)

Related Topics

Business News

Police: 82-Year-Old Woman Found Alive at New York Funeral Home After Being Pronounced Dead

The woman was found breathing almost three hours after she was pronounced dead.

Business News

An NFL Rookie Scores a $514,000 Jackpot in Las Vegas

Los Angeles Rams running back Ronnie Rivers sat down to play 3-card poker and left a half million dollars richer.


The Greasy, Glamorous Rise of Mascara

You won't believe the grimy gunk people used to smear on their eyelashes -- and still do.

Business Ideas

How to Make Thousands of Dollars on the Side As a Virtual Assistant

Apply your skills and experience to create a lucrative virtual assistant side hustle or full-time business.


Invest in Yourself: 10 Things Every Working Woman Should Do This Year

When striving for success, it is easy to forget about your mental and physical health. But without health, you cannot fully succeed. Follow these ten lifestyle strategies for success in your personal and professional life.


Two Stanford Professors Explain How to Produce Hundreds of World-Changing Ideas In 1 Hour

Cramming everyone into a conference room to "spitball" is a disaster. But with some structure and a system, literally thousands of ideas are within reach.