EBay Poised to Gain 30% Chasing Amazon Without PayPal: Real M&A
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Instead of running auctions for artillery shells, harpoons and zen gardening kits, a faster way for EBay Inc. (EBAY) to enrich its owners would be to split off PayPal.
Since John Donahoe succeeded Meg Whitman as EBay’s chief executive officer in March 2008, the world’s biggest online marketplace has returned less than 2 percent to shareholders. In the same span, its rival Amazon.com Inc. (AMZN) overtook EBay in equity value after more than doubling to $83 billion.
While EBay is worth $40 billion, separating PayPal, its online payments unit that is increasing sales twice as fast, would boost the combined value of the entities by as much as 30 percent, according to data compiled by Huntington Asset Advisors and Bloomberg. A spinoff would also let EBay finance its transformation into an online retailer more like Amazon without raising PayPal’s borrowing costs (EBAY), Morgan Keegan & Co. said.
“It may simply be better for PayPal to not be buried inside EBay,” Peter Sorrentino, who helps oversee $14.5 billion at Huntington, including shares of EBay, said in a telephone interview. “That’s something I would hope they’ve looked at as an exit strategy. Then that would allow you to jack up EBay.”
Jan11
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