Since 2002 when eBay acquired
PayPal, at a price of $1.5 billion, the merger was successful. PayPal boasted
more than 162 million active digital wallet users globally in 2014 and
processed some $624 million in payments every day.
However, as more payment
companies showed up in the payment market, bundle of two companies seems to be
a disadvantage for both ebay and PayPal. They limited each other and start losing
chances to corporate with other companies. For example, PayPal after divorce
with ebay would be able to corporate with Amazon and Alibaba. Meanwhile, ebay
could work with Apple pay and Google wallet.
“As independent companies, we expect eBay and
PayPal will be sharper and stronger, and more focused and competitive as
leading, standalone companies in their respective markets,” according to the
filing with the Securities and Exchange Commission. “EBay and PayPal also will
benefit from additional flexibility and agility to pursue new market and
partnership opportunities.”
The arrangement would
increase both companies’ competitive power by remaining independent of each
other but excluding prohibition on each working with the other’s core
competitors.
Like real divorce, if PayPal’s
share of the transactions falls below that level, eBay must pay its former
subsidiary restitution. The deal will last for six years, including a one-year
transition period.
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