Icahn Proposes eBay Inc (EBAY) To Spinoff Paypal In A Separate Company

eBay Inc (NASDAQ:EBAY) along with its fourth quarter fiscal 2013 earnings a statement claiming that investor Carl Icahn has proposed for the spin-off PayPal as a separate business. Activist investor, Carl Icahn has reportedly appointed two of his employees on eBay’s Board of Directors. Carl Icahn has an “economic interest” of 0.82% in eBay.

To split or not to split

Icahn thinks that it would be beneficial to spin off PayPal because once eBay Inc (NASDAQ:EBAY) and PayPal are separated; latter would find it easier to innovate and execute things faster. The statement by Icahn echoes a similar idea of PayPal president David Marcus while speaking at a Read Write Mix event in San Francisco discussing how to streamline the payment processing company.

However, Marcus said that if pure pay startups want to succeeded they need a “parasite/host” relationship, which at present PayPal has with eBay.

Both, eBay and PayPal, have given an explanation on the fact why spin-off will not work in their favor. It cites three main reasons: “eBay accelerates PayPal’s success; second, eBay data makes PayPal smarter; and third, eBay funds PayPal’s growth.”

eBay said that it is ready to listen and give due consideration to Icahn’s perspective. Board of Directors at eBay said that both the company and its shareholders are getting maximum value through the current strategy adopted by the company, and does not believe in spinning off the company is the best way to add to the shareholders value.

Impressive numbers for the quarter

PayPal posted an increase of over 19% in revenue for the quarter and in full fiscal, adding $6.6 billion to eBay in 2013. In the current fiscal active registered users sign-in increased to 5.2 million totaling 143 million for PayPal. Total transactions made were posted around 3 billion, which is a surge of 25% in net total payment volume for the quarter.

According to the company’s statement, the payments volume of eBay Inc (NASDAQ:EBAY) surged 128% for the year and total mobile volume this year came in at $27 billion. Separately, eBay announced that it will implement an additional $5 billion stock purchase program. This additional purchase would add to the company’s existing $640 million stock repurchase program that was announced, in June 2012.

Shares of eBay have climbed 7.57% in after hours trading to be at $54.41.