As eBay moves closer to spinning off from PayPal in the fall, it's taken another big step to shed some of its extra weight.
eBay announced Friday (June 19) that it had sold back its 28.4 percent equity stake in Craigslist. eBay had acquired that equity more than a decade ago in 2004, and the recent terms were made under the confidential settlement agreement, eBay said.
Per the agreement, all litigation between the two companies will also be dismissed.
According to Bloomberg, the litigation stems from eBay's creation of its own online classified site called Kijiji, which was launched at the same time eBay purchased a stake in Craigslist. That online site eventually was transformed into the site EbayClassifieds.com.
For eBay, this move comes just months before it plans to move forward with PayPal's spinoff into its own publicly traded company. eBay has said that the PayPal spinoff will occur in the third quarter, but has not specified a date.
And when PayPal splits off into its own company, eBay’s largest shareholder, Carl Icahn, may finally get clarity on the one question he’s made other investors ponder: Is eBay holding back PayPal’s full potential?
While neither he nor investors will know the full answer for years to come, what eBay’s first-quarter earnings showed is the power of PayPal as a contributor to eBay’s overall strong financial performance. PayPal’s growth in revenue, transactions and mobile volume over the last three months helped the eCommerce company post a better-than-expected first quarter, while eBay’s Marketplace performance sagged for the first time since 2009.
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