Difference between revisions of "Creating value by splitting businesses"
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| − | https://www.ebayinc.com/stories/news/ebay-paypal-become-independent-companies-2015/ | + | == Firms Involved == |
| + | * Paypal | ||
| + | * Ebay | ||
| + | |||
| + | == Year of the event == | ||
| + | 2015 | ||
| + | |||
| + | == Description of the case == | ||
| + | Ebay acquired Paypal in 2002 for $1.5bn. at the time, the marketplace was significantly larger than the payment service company, which hoped to leverage on a closer relationship with Ebay to achieve superior growth. However, it became clear, 10 years after the acquisition of Paypal by Ebay, that the two business did not fit together. They each carried very different operations and business. Paypal needed to fly again with its own wings. Under the pressure of activist shareholder Carl Icahn, Ebay agreed to split the business<ref>[https://www.ebayinc.com/stories/news/ebay-paypal-become-independent-companies-2015/ Ebay, ''Ebay and Paypal to become independent companies in 2015'']</ref>, an operation that was carried out in 2015. On the announcement date of the split, Ebay and Paypal stocks appreciated by close to 9%. | ||
| + | |||
| + | == Take-aways == | ||
| + | * Separating businesses can create more opportunities and room for growth to each, and hence increase their value: the whole is sometimes smaller than the sum of the parts. | ||
| + | |||
| + | == References == | ||
| + | <references /> | ||
Latest revision as of 17:35, 22 June 2017
Firms Involved
- Paypal
- Ebay
Year of the event
2015
Description of the case
Ebay acquired Paypal in 2002 for $1.5bn. at the time, the marketplace was significantly larger than the payment service company, which hoped to leverage on a closer relationship with Ebay to achieve superior growth. However, it became clear, 10 years after the acquisition of Paypal by Ebay, that the two business did not fit together. They each carried very different operations and business. Paypal needed to fly again with its own wings. Under the pressure of activist shareholder Carl Icahn, Ebay agreed to split the business[1], an operation that was carried out in 2015. On the announcement date of the split, Ebay and Paypal stocks appreciated by close to 9%.
Take-aways
- Separating businesses can create more opportunities and room for growth to each, and hence increase their value: the whole is sometimes smaller than the sum of the parts.
