eBay 'could spin off PayPal next year'

Shares in eBay jumped as much as 5pc on Thursday following reports that the online marketplace could bow to pressure from activist investor Carl Icahn and spin out its PayPal payments business next year.

The company, which is seeking a replacement chief executive for its PayPal unit, has told candidates that the business could be spun off into a standalone entity as early as 2015, according to US website The Information. PayPal's previous chief executive, David Marcus, left the company in June to run Facebook's messaging services.

EBay’s private message to would-be recruits stands in contrast to the position eBay has taken publicly.

The online retailer has repeatedly told investors that eBay and PayPal are “better together”, as it fended off attacks by Carl Icahn who is campaigning to prise them apart.

The septuagenarian billionaire, who has a 2.5pc stake in eBay, has argued that the fast-growing PayPal business as a “jewel”, whose value is being “covered up” by its parent company. He has also accused John Donahoe, eBay’s chief executive, of being “’completely asleep”.

The online retailer acquired PayPal in 2001, paying $1.5bn before electronic payments became widespread. Earlier this year, its co-founder Elon Musk and former chief operating officer David Sacks – neither of whom remain with the business – predicted that PayPal could be worth more than $100bn if it were allowed to go it alone. That is far more than eBay’s market capitalisation, which stands at $66bn.

On Thursday, eBay refused to confirm or deny reports that it is briefing chief executive candidates about a potential split. Instead it repeated an earlier statement that it will assess all options

"The eBay board and management team remain focused on maximising shareholder value…The board will continue to assess all alternatives to create that long term value and to enhance the growth and competitive positions of both eBay and PayPal. This position has not changed," a spokesman said.

However, investors clearly believe that eBay is warming to the idea of a spin-off. Shares spiked at $56.96 immediately after the report became public, and remained up 4.5pc at $55.78 in afternoon trading in afternoon trading in New York.