EBay Inc shares climbed after The Information reported the company could spin off its payment unit as soon as next year.
The world’s biggest online marketplace has been telling potential candidates for the president of PayPal that it is considering spinning off the division as soon as next year, The Information said in a report on Thursday.
EBay has not yet begun interviewing candidates for the top position at PayPal said a person with knowledge of the matter, who asked not to be identified because the matter is private.
The report follows activist shareholder Carl Icahn’s campaign earlier this year for eBay to spin off PayPal. The parties settled in April and eBay agreed to add an independent director. The San Jose, California-based company also took a tax charge to let it repatriate foreign earnings, although it has not specified any plans for the money.
“The eBay Inc board and management team remain focused on maximizing shareholder value,” eBay spokeswoman Amanda Miller said in an e-mailed statement. “As we discussed during proxy season and in our second-quarter financial results call, the board will continue to assess all alternatives to create that long-term value and to enhance the growth and competitive positions of both eBay and PayPal. This position has not changed.”
The payments unit is fueling growth at eBay, with PayPal revenue up 20 percent in the latest quarter, compared with a 9 percent gain in the marketplace business.
David Marcus left as PayPal’s president to join Facebook Inc earlier this year. EBay has been telling potential recruits for the top PayPal position that it might spin off the business as soon as next year, The Information reported, citing two unidentified sources.
EBay has looked at different ways it might use its cash. The company said in April it is taking a US$3 billion tax charge to potentially return US$9 billion in profits to the US. The money could be used for stock buybacks or acquisitions, executives said at the time.
“We have more flexibility to use that offshore cash domestically if we — when we need it,” eBay chief financial officer Robert Swan said last month on a call with analysts, adding that he is not contemplating a large US acquisition.
EBay chief executive officer John Donahoe has repeatedly said PayPal and eBay are stronger together than separately.
“We are blessed with two great businesses and will continue to aggressively drive growth for PayPal and eBay,” Donahoe said during a call with analysts last month. “We and our board will remain objective and open-minded in assessing alternatives which we continue to do. We will make decisions that maximize long-term shareholder value, and we will do what’s best for PayPal and eBay to enhance their growth and competitive positions.”
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