eBay Inc (NASDAQ:EBAY) has been facing pressure from a lot of investors to spin-off PayPal as a different company. The pressure got more intense when Billionaire hedge fund manager Carl Icahn became a large shareholder in eBay Inc (NASDAQ:EBAY) and started to pursue the company to spin-off PayPal. Somehow, eBay Inc (NASDAQ:EBAY) managed to convince Icahn that currently eBay Inc (NASDAQ:EBAY) and PayPal make a great fit though if in the future, eBay Inc (NASDAQ:EBAY) sees more value in spinning-off PayPal, it won’t shy away from doing so. Brian Womack and Cory Johnson discussed if spinning-odd PayPal would be good for eBay Inc (NASDAQ:EBAY) on Bloomberg, recently.
“[…] If you look back at the history, the reason that eBay Inc (NASDAQ:EBAY) acquired PayPal […] was not because it was a superior payment platform, indeed they had the eBay payment platform that they thought quite highly off, but they were really worried about Amazon buying the money losing PayPal but learning so much about how people shopped on eBay Inc (NASDAQ:EBAY) […],” Johnson said.
Johnson mentioned that at the time eBay Inc (NASDAQ:EBAY) acquired PayPal, Amazon was building its own marketplace hence validating his point that eBay Inc (NASDAQ:EBAY)’s acquisition of PayPal was based more on securing its trade secrets than buying a superior payment platform. Johnson feels that even after all these years eBay Inc (NASDAQ:EBAY)’s perception towards PayPal hasn’t changed and the company wants to keep PayPal within its umbrella to safeguard its trade secrets.
Womack clarified that in its settlement with Carl Icahn, eBay Inc (NASDAQ:EBAY) had not said that PayPal would never be spun-off, they had said that they would listen to its shareholders and if the split made good sense and increased shareholder value, then they won’t mind spinning-off PayPal. According to Johnson, even though eBay Inc (NASDAQ:EBAY) is not growing at the pace of PayPal, it fuels PayPal growth by supplying it with cheap capital that eBay Inc (NASDAQ:EBAY) generates, creating great synergies between the companies.
As of June 30, 2014, Carl Icahn’s Icahn Capital LP owns 30.8 million shares in eBay Inc (NASDAQ:EBAY).