Shares of eBay (NASDAQ:EBAY) were trading 1.5% higher this afternoon after the company said that the European Central Bank (ECB) officially endorsed its split with PayPal in what was the last step before the latter could achieve independence and resume trading under its previous NASDAQ ticker, PYPLV.
The US based online auction specialist said that the full split will be officially declared on July 17 and PayPal’s first listing as an independent entity on the Nasdaq will occur on July 20. The ECB’s clearance was the last hurdle standing before the ‘separation’.
“EBay and PayPal are two great businesses with extremely bright futures — as independent companies, their sharper focus and increased flexibility will improve their ability to pursue their respective market opportunities and strategic priorities,” said eBay’s president and CEO, John Donahoe, in a statement.
Ebay bought the online payments platform in 2002 and it has succumbed to pressure from activist investors such as Carl Icahn, to relinquish control of PayPal, leaving it as a detached entity to improve its share price.
Deutsche Bank analyst Bryan Keane said that PayPal, which will resume trading under its, has attracted a customer base of 165 million users worldwide.
By cutting the umbilical cord to eBay, PayPal will be in a better position to attract eBay’s competitors and other online merchants, accelerating growth. Keane said that Amazon, an eBay competitor, might be one of the potential new customers.
Keane also suggested that PayPal, whose target price is US$42, is well positioned to benefit from the growing trend for people to pay for goods and services through their mobile phones.