Ebay, PayPal, Hewlett-Packard – Breaking Up Is Hard.

Ebay, PayPal, Hewlett-Packard – Breaking Up Is Hard.
8 October 2014

Breaking Up Is Hard To Do
Neil Sedaka, Howard Greenfield, 1962

Convention wisdom about the 2015 split of eBay INC, says the separate parts will be quickly sold off.  Might not happen quickly.

In The Wall Street Journal article, “Dealpolitik: EBay, PayPal Takeover Talk May Be Premature”, Ronald Barusch makes this interesting point.

eBay probably has massive gains on its PayPal shares that would trigger huge taxes if the deal didn’t qualify as a tax-free spin-off.

For up to two years after the spin-off, an acquisition of either PayPal or eBay (regardless of which company is spun off) could destroy the tax-free status of the deal and trigger an enormous corporate tax. In spin-offs, the agreements usually make the company that’s taken over bear the risk of that tax.

Such an agreement operates as a kind of poison pill of its own: Anyone trying to take over one of the companies would indirectly be responsible for that big tax bill”

The short version being:

The bottom line is that those expecting a quick deal following the spin-off may be jumping the gun.

Of course with eBay INC CEO John Donahoe leading the separation plans, there is no guarantee that a monetarily smart long-term plan will be made.  I.E. shareholders could be stuck with a huge tax bill, while John Donahoe skates.

“A monkey could drive this train.”
Margaret “Meg” Whitman, during her tenure as eBay INC CEO.

Monkey sees, monkey does.
Alexander Boot and Shoe Company, 1892

On the heals of John Donahoe splitting eBay INC, Margaret “Meg” Whitman is leading the charge to split Hewlett-Packard.  However not into “Hewlett” and “Packard.”

Hewlett-Packard to split into two public companies, lay off 5,000
October 6, 2014
Supantha Mukherjee and Edward Chan

“Hewlett-Packard Co said it would split into two listed companies, separating its computer and printer businesses from its faster-growing corporate hardware and services” … “HP said its shareholders would own a stake in both businesses through a tax-free transaction next year.” … “Whitman, who will be CEO of HP Enterprise, the business that will sell computer servers and networking gear and data storage to businesses.

Perhaps the ‘monkey see, monkey do’ reference is not entirely fair.

Meg Whitman is planning “a tax-free transaction” and will be CEO of one of the split companies.  John Donahoe has not mentioned “tax-free” and will not be CEO of either the new eBay or PayPal.


  • 2 January 2014 to 8 October 2014, Hewlett-Packard stock has surged, $27.98 to $35.92.
  • 2 January 2014 to 8 October 2014, eBay INC remains stagnant, $53.94 to $54.51.

Meanwhile, at the close of market. 8 October 2014:

  • Alibaba – $88.30
  • Amazon – $322.70
  • American Express – $87.41
  • MasterCard – $74.06
  • Visa – $212.36

I didn’t think eBay was right for me.
John Donahoe, 17 June 2013



Addendum 9 October 2014

No one here has received anything directly from eBay INC, about their separation into “eBay” and “PayPal”.

Whereas days after the public announcement, Hewlett-Packard sent this Today:

20141009 HP

We’re no fan of Meg Whitman, but Hewlett-Packard does keep it’s customers informed.

eBay INC, ‘not so much.’


No sequel for you.
Jack Slater, Last Action Hero (1993)


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