PayPal's split from eBay will come to a close, and its new life as a separate company will happen, on July 20.
So who will invest in PayPal? All of eBay's shareholders. The company said investors will receive one share of PayPal (tentatively under the symbol "PYPL") for every share of eBay ("EBAY") they own, according to a statement Friday.
The move marks the end of what has been seen as an awkward partnership since eBay acquired PayPal for $1.5 billion in 2002. The deal was initially pitched as a way for eBay to boost PayPal transactions by driving auction participants toward the online payment service. But eBay itself apparently couldn't realize any significant merger benefits beyond pushing traffic.
Since then, PayPal has become a bright spot of eBay's business and is expected to flourish on its own when it hits the market. When eBay announced the split last September, its shares jumped on the news, rising by more than 7 percent in hours, its most dramatic spike in years.
Becoming independent will allow PayPal to exclusively focus on payments, a strategy that had been discussed by eBay's board but deemed unwise until the surprise split announcement last fall. "The commerce and payments landscape is rapidly changing," the statement said, "and each business faces different competitive opportunities and challenges."
In 2014, about 162 million people used PayPal, according to today's announcement, and total payment volume for the year increased by 26 percent to $235 billion.
The move is also a victory for activist investor Carl Icahn, who began agitating for a separation in January after eBay offered disappointing earnings. In March, he offered an alternative plan to sell off 20 percent of PayPal via an initial public offering. In a statement posted on his blog, Icahn said he was pleased with the split.
"It is almost a 'no brainer' that these companies should be separated to increase the value of these great assets and thus to meaningfully enhance value for all shareholders," Icahn said.
After the tax-free spinoff next month, eBay CEO John Donahoe will step down as the company's top operating executive and join one or both of the boards of the two new companies. He has been at eBay for a decade, serving as CEO since 2008.