PayPal President: No Spinoff
Posted by: Douglas MacMillan on June 17

After eBay said in April that it planned to spin off its Skype business, some investors and analysts started wondering about the e-commerce company’s other major subsidiary: What about PayPal? In the past two weeks, a number of sources have said they have heard talk that eBay is exploring different options for realizing more value from the lucrative payments business.

One source said he had heard the company was considering selling PayPal to a consortium of private equity investors while keeping an equity stake. Another heard a rumor that eBay would issue a tracking stock for PayPal.

But during a visit to BusinessWeek, PayPal president Scott Thompson dispelled these notions. Thompson says that although even he has heard the speculation about spinning off PayPal, he and eBay CEO John Donahoe have not discussed any such options. “We have not talked about that,” he says. “I think we’re going to be part of the eBay Inc. family for a long time to come.”

Thompson admits that he “understands the logic” of wanting to unlock value in PayPal, but he argues that eBay’s strong balance sheet is an important asset to have while his business is growing. The parent’s deep pockets helped with the $945 million acquisition of Bill Me Later in October, Thompson says. “If we were a separate company, would we have done it? I’m sure we would have tried because it was the right thing to do for the business. But it was fundamentally easier having that very strong balance sheet.”

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