Icahn says PayPal spin-off is almost a 'no brainer'

Activist investor says PayPal needs to acquire competitors or be acquired

PayPal Here with chip-and-PIN reader

PayPal Here with chip-and-PIN reader

Activist investor and hedge-fund manager Carl Icahn says eBay's decision to spin off PayPal into a separate company is "almost a no brainer."

Icahn, who is a major shareholder in eBay, first suggested the move several months ago but eBay's board resisted the idea at the time, saying the two companies were better off together.

That changed with Tuesday's announcement that the eBay board has approved a plan to spin-off the eBay and PayPal businesses into independent publicly traded companies sometime in 2015.

"We are happy that eBay's board and management have acted responsibly concerning the separation," Icahn said in a statement, "perhaps a little later than they should have, but earlier than we expected."

The decision comes as interest in online and electronic payments builds ahead of the release of Apple Pay, a contactless payment system expected to be launched by Apple in October.

Apple Pay is based on the same NFC technology used by PayPal and Google in their own smartphone payment apps -- systems that have so far failed to find widespread adoption among consumers.

Icahn said he believes the spin-off of PayPal is a step towards needed consolidation in the payments industry.

"It also continues to be my belief that the payments industry, of which PayPal is an important part, must be consolidated -- either through acquisitions made by PayPal or a merger between PayPal and another strong player in the industry," he wrote.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

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Tags Mergers and acquisitionsinternetbusiness issuese-commerceebayInternet-based applications and services

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Martyn Williams

IDG News Service
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