S&P Dow Jones Indices, the world’s leading index provider, announced yesterday (July 14) that PayPal will replace eBay in the S&P 100 index, which measures the performance of large capital companies in the U.S. and comprises 100 major companies across various industry groups.
“These actions will be effective after the close of trading on Friday, July 17. Ebay is spinning off PayPal to shareholders in a transaction expected to be completed on that date. Ebay will remain in the S&P 500 following completion of the transaction,” the press release stated.
According to The Wall Street Journal, for the next five years eBay agreed to maintain the 80 percent of its gross merchandise sales from its online marketplace which is currently routed through PayPal. EBay will also have to pay restitutions to PayPal if its shares dip below that level; on the other hand, PayPal will pay eBay commission if its sales on the marketplace rise above that mark, WSJ said.
The announcement of whose stock options will be measured where comes on the heels of eBay and PayPal receiving the final approval needed in order to make the separation deal possible.
EBay’s outgoing CEO John Donahoe — who will serve as chairman of PayPal’s board following the split — confirmed earlier this week that the European Central Bank approved the eBay-PayPal separation. With that decision, the official separation is now planned for Friday, July 17, at 11:59 p.m. EST.
By Monday, July 20, PayPal’s stock will begin trading on NASDAQ once again as PYPL.
“As independent companies, their sharper focus and increased flexibility will improve their ability to pursue their respective market opportunities and strategic priorities. I am confident that eBay’s new CEO, Devin Wenig, and PayPal’s new CEO, Dan Schulman — and their respective management teams — have the right strategies and operating structures in place to enable eBay and PayPal to deliver lasting shareholder value and unsurpassed user experiences for their customers around the world,” Donahoe wrote on eBay’s blog earlier this week.