EBay has been telling PayPal CEO candidates that PayPal might in fact be spun off, according to a report in The Information.
Such a move would be somewhat surprising, after eBay CEO John Donahoe and eBay’s board spent a large chunk of early 2014 fighting off activist investor Carl Icahn’s attempts to force such a spin-off. At the time, CEO Donahoe said that PayPal and eBay were mutually integral to the other’s business and should not be separated.
PayPal is far and away eBay’s most valuable business unit. It provides 40 percent of eBay’s revenue and is its main growth driver. Analysts currently independently value PayPal at about $40 billion—though that valuation could contract as more competition enters the field from Apple and Google.
eBay has not confirmed that it is considering a sale or spin-off of PayPal, but the company confirms it is assessing all options. When briefing potential CEOs, mentioning such a possibility is a fine way to assess their thinking and to hear how they would deal with such an option. It’s a good way to assess a potential CEO and is also a really good way to get free counsel from candidates that the board presumably respects.
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