PayPal will be guaranteed a reliable source of revenue after the payments service separates from eBay Inc later this year.
The businesses are drawing up a five-year operating agreement in preparation for the split, which was announced six months ago and is scheduled to be completed by the end of this year, eBay said in a statement on Thursday.
The names of initial board members after the separation were also announced.
Photo: Reuters
An independent PayPal will be freed up to forge alliances with retailers and other financial firms, as Google Inc and Apple Inc seek to turn their products into tools for digital payments. EBay’s marketplaces business, which is facing competition from Amazon.com Inc and Alibaba Group Holding Ltd (阿里巴巴), has seen revenue growth lagging behind PayPal, which it bought in 2002.
The goal of the contracts is to provide stability and flexibility for each company after the split, eBay chief executive officer John Donahoe said in an interview.
The plan was designed so that each enterprise could survive on its own, even if either company was acquired by a competitor, he said.
“The guiding principles are continuity for eBay customers — merchants and consumers — as well as synergies and strategic flexibility,” Donahoe said.
Donahoe is to chair PayPal’s board. EBay director Thomas Tierney is to become chairman of the online marketplace. EBay’s current chief financial officer, Bob Swan, is also to join the board of the marketplace business, the company said.
Pierre Omidyar, eBay’s founder, is to be a director of both companies after they separate. Additional board announcements will be made in the coming months, eBay said.
The agreement prevents eBay from forming a payments service and bars PayPal from developing its own online marketplace for physical goods, Donahoe said.
EBay could change its payments strategy if PayPal is bought by an eBay competitor, he said. In that event, eBay would have to give PayPal 15 to 21 months notice.
Donahoe declined to name potential acquirers.
The companies is to continue to share data to prevent fraud and provide customer service, he said.
EBay, based in San Jose, California, announced the split last year after activist investor Carl Icahn said PayPal was being held back by being put together with its parent’s slower-growing business.
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